Dollar strengthens

NEW YORK: The dollar started the third quarter on a positive note, benefiting from mounting global trade tensions and political developments in Europe, as investors scooped up the greenback as a safe-haven bet.

Tension is growing ahead of a July 6 deadline when Washington is due to impose $34 billion of tariffs on Chinese exports, with two surveys of Chinese manufacturing out in the last few days showing a softening in activity, partly due to softness in exports.

"The dollar seems to have benefited from safe-haven flows as trade tensions and political developments in Europe have reduced investors´ appetite for risk," said Oliver Jones, market economist at Capital Economics in London.

Meanwhile, German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating row over migration policy, pushing the euro lower.

Late on Monday, Merkel said a compromise had been reached between the Christian Social Union (CSU) and her Christian Democrats (CDU) on the migration issue, which essentially would secure the principle of freedom of movement within the EU while allowing Germany to take "national measures" to limit migrant arrivals.