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By Bloomberg

The dollar headed for its highest close in more than a decade as U.S. economic reports bolstered speculation the Federal Reserve will raise interest rates before year-end amid a wave of monetary easing by other central banks.

The greenback rose through 120 yen for the first time in more than two weeks after a measure of consumer purchases gained in January in a sign the plunge in gasoline prices is helping boost the biggest part of the U.S. economy. Fed Chair Janet Yellen said last week the timing of any increase in borrowing costs will depend on economic data. The central bank has said it can be “patient” on raising rates.

The reports were “all pretty much in line with the consensus,” said Matt Derr, a foreign-exchange strategist in New York at Credit Suisse Group AG. “It sounds like if data can come in with what the market’s looking for, they can drop that ‘patience’ language, and that can keep the door open to a June rate hike.”

The Bloomberg Dollar Spot Index , which tracks the U.S. currency against 10 major peers, added 0.4 percent to 1,176.61 at 3:51 p.m. in New York. It was the highest on a closing basis in data going back to 2004.

The dollar rose a third day versus the yen, adding 0.5 percent to 120.18, and gained 0.1 percent to $1.1183 per euro.

U.S. consumer purchases adjusted for inflation rose 0.3 percent, following a 0.1 percent drop the prior month, a Commerce Department report showed.

Fed Speculation

The Markit Economics final index of U.S. manufacturing climbed to a four-month high of 55.1 in February from 53.9 a month earlier, the London-based group said. While the Institute for Supply Management’s factory index declined to 52.9 last month from 53.5 a month earlier, it remained above the 50 level that signals growth.

“There’s definitely going to be a lot more focus on the data going forward,” said Sireen Harajli, a Mizuho Bank Ltd. strategist in New York. “Markets will try to look at the details and try to figure out what the Fed may or may not do as a result of the data.”

The Fed is moving toward raising borrowing costs for the first time since 2006 as central banks from Europe to Australia ease. On Saturday, the People’s Bank of China became the 17th central bank, of 57 monitored by Bloomberg News, to lower its benchmark this year.

The European Central Bank, which meets Thursday, is due to start sovereign-bond purchases this month. The Reserve Bank of Australia will cut rates for a second consecutive meeting on Tuesday, lowering its cash target rate a quarter-percentage point to 2 percent, according to the median prediction of 29 analysts surveyed by Bloomberg News.

Futures trading showed a 57 percent chance Friday that the Fed will raise rates by October. At the end of January, traders saw a 47 percent likelihood.

The dollar has “an edge against its rivals,” said Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co. “Constructive U.S. data keeps the door open to an early Fed rate hike.”