The US dollar fell against the Antipodean currencies and the British pound after surprising improvement in US labour market data bolstered expectations for economic recovery, which reduced safe-harbour demand for the greenback.
The Australian and New Zealand dollars both rose to their highest since January after data showed a smaller-than-expected fall in Chinese exports, which supports commodity currencies.
In contrast, the US dollar traded near its highest in more than two months against the yen, supported by recent gains in long-term Treasury yields as investors await the outcome of a US Federal Reserve meeting.
Sentiment has improved dramatically in the currency market as traders focus on signs of a rebound from the coronavirus outbreak, which has hurt the dollar and driven money into so-called risk-on trades.
“Commodities and emerging market currencies are clearly finding it easier to rise against the dollar on hopes of economic recovery, but it is a different story when it comes to the yen,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
“For dollar/yen the focus is more on yields, which is pushing the currency pair higher.”
The Australian dollar rose 0.34 per cent to $0.6993, approaching the highest since January 2.
The New Zealand dollar rose to $0.6533, the highest since January 29.
Against the pound, the dollar fell 0.25 per cent to $1.2704 in Asia on Monday, close to its lowest since March 12.
The dollar traded at 109.67 yen, close to a two-month high set on Friday.
The US economy unexpectedly added jobs in May after suffering record losses in the prior month, data on Friday showed.
The jobless rate also fell to 13.3 per cent last month from a post-World War Two high of 14.7 per cent in April, offering hope that the world's largest economy is starting to stabilise after the pandemic triggered a wave of job cuts.
Some investors may avoid making big trades before the Federal Reserve meeting ending on Wednesday to see how Chairman Jerome Powell views a recent rise in 10-year Treasury yields and a steepening in the yield curve.
The onshore yuan is in focus after data on Sunday showed exports from China, the world's second-largest economy, fell less in May than the market expected.
The pandemic first emerged in China late last year and has caused a sharp contraction in global economic activity, but many traders are now focused on the pace of recovery in the second half of this year.
Some analysts said there are still many risks to the outlook, including diplomatic tension between the United States and China, and the US presidential election later this year.
Net short US dollar positioning fell to $8.17 billion in the week ended June 2 from $8.6 billion the previous week, showed US Commodity Futures Trading Commission data released on Friday, which may discourage some investors from selling the dollar further.
The euro rose to $1.1314 as the common currency continued to ride a wave of optimism after the European Central Bank said last week it will increase bond purchases to help the bloc's weakest economies.
Sentiment will face a test later on Monday with the release of data forecast to show that German industrial output fell the most on record in April.