The dollar rose to new multi-year highs against the yen, euro and a basket of currencies on Monday, a three-month-old rally showing no signs of dissipating before a week of important economic set pieces.

Employment numbers on Monday preface the month's biggest release in the United States, non-farm payrolls. They are expected to drive home the message sent by gross domestic product numbers on Friday of an increasingly robust recovery.

By contrast, a first estimate of September inflation is expected to show the euro zone economy is stagnating. That divergence has driven the euro almost 9 percent lower since July, to its weakest in almost two years.

The biggest mover among developed-world currencies in Asian trading was the New Zealand dollar. Figures showed the country's central bank intervened heavily against its currency in August.

That, and weekend protests in Hong Kong, added to the sense of a more turbulent period ahead for markets as the U.S. Federal Reserve brings an end to a program of bond-buying that has pumped trillions of dollars into the global economy.

"I do wonder if there's a bit of risk aversion sliding into the dollar rally now," said Adam Myers, European head of FX strategy with Credit Agricole in London.

"If we do see a bit of a back-up in performance in emerging markets, then we may see people moving towards buying dollars as a safe haven on top of the strength we have seen."

The kiwi was some 1.4 percent lower at $0.7760. The yen was another quarter point lower at 109.55, just off a new six-year high for the dollar of 109.75 yen.

INFLATION

Data released by the Commodity Futures Trading Commission on Friday showed speculators increased their bullish bets on the U.S. dollar in the week ended Sept. 23. The value of the dollar's net long position rose to $35.81 billion from $31.42 billion the previous week. [IMM/FX]

"There is definitely the feeling that the dollar is moving towards overbought territory," Myers said. "If we get a weak payrolls number at the end of the week, we may well see a decent correction next week."

Economists expect the report will show U.S. employers hired 219,000 people in September, a rebound from August's rise of only 142,000.

The essence of the dollar's rise since July has been the divergence of the U.S. economy's direction from those of Europe and Japan. The Fed is beginning to rein years of loose monetary policy; the Bank of Japan and the European Central Bank are under pressure to do more for growth.

Euro zone inflation is expected to fall to 0.3 percent from 0.4 percent a month ago, underlining that picture ahead of the ECB's monthly meeting on Thursday. The euro reached 1.2664, its lowest in almost two years, in Asian trade before stabilizing in early deals in Europe.

Asian market attention turned to Hong Kong, where democracy protesters defied volleys of tear gas and police baton charges in the financial center.

The city's de facto central bank said the Hong Kong dollar was stable after the tense situation had earlier pushed the currency to a six-month low in its biggest fall in a single day this year.

The Hong Kong dollar, which is pegged to the U.S. dollar, was last up about 0.1 percent at 7.7623 against the greenback.

"The Hong Kong situation is not a big factor for major currencies now, but it could be one for emerging currencies, which means that probably it will lead to an even higher dollar," said Masashi Murata, a senior currency strategist at Brown Brothers Harriman in Tokyo.