The US dollar hit a six-week peak against the yen and a four-day high versus the euro on Thursday as players in Asia trimmed their exposure to commodity-driven and high-yielding currencies.
The Greenery Day holiday in Japan subdued trading volumes, but not the exuberance of the dollar, which has been powered by expectations for an interest rate rise in response to an improving economic outlook in the United States.
Price falls in precious and base metals pulled down currencies such as the Australian dollar and Canadian dollar, after Chinese premier Wen Jiabao said China needed to take forceful action to slow down its rapidly growing economy. The country has been the major driver behind a global rally in raw materials prices.
Ashley Davies, UBS currency strategist in Singapore, said it was not clear how much the Chinese economy would slow this year and how much that would affect commodity prices overall.
"But commodity prices were in for a correction and the China story provided the excuse," he said.
Philip Wee, strategist at Singapore's DBS Bank, said a slower pace of growth in China would also affect all those Asian economies, including Japan, that had been exporting an increasing share of their goods to the country.
In an interview with Reuters on Wednesday, Wen said China needed to act forcefully to cool its red-hot economy, which grew 9.7 percent between the first quarters of 2003 and 2004, and protect itself against inflationary pressures.
The dollar touched 110.39 yen, its strongest since March 15, and against the euro it saw a high of $1.1813, last reached on Monday, before losing some ground. Sterling hit a four-session low of $1.7678.
Among commodity currencies, the Australian dollar fell to a five-month low of $0.7172. The Canadian dollar traded around 1.3750 per US dollar, just shy of an eight-month low of 1.3761 hit in New York, Reuters data showed.
Dealers said the euro could fall as low as $1.1759 on Thursday, a five-month low hit on Monday, and the yen could touch 110.50 per dollar.