The dollar climbed to a one-week high against a basket of currencies on Thursday while awaiting data due later in the session that could back some Federal Reserve officials' relatively optimistic views on the US economy. The dollar index touched 96.235, its highest since March 16. The US currency was on the front foot after St. Louis Fed President James Bullard added his support to the possibility of more US interest rate hikes this year.
Bullard said in an interview on Wednesday that policymakers should consider raising rates at their next meeting in April. Philadelphia Fed President Patrick Harker said earlier this week he would prefer at least three hikes before year end. Such comments have helped the dollar rebound from losses suffered last week when the Federal Reserve indicated caution towards the economy and reduced its rate hike projections for this year to two from four.
Economic indicators due later on Thursday include the US durable goods orders and jobless claims data. Upbeat readings would help support the case for the Fed to steadily tighten monetary policy. "The hawkish comments from Fed officials have helped, but participants adjusting their positions before the Easter weekend also appear to be supporting the dollar," said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.
The dollar was up 0.4 percent at 112.795 yen and near a six-day high of 112.905 overnight. The greenback retreated to a 17-month low of 110.67 last week after the Fed reduced its rate hike projections for this year. The euro dipped 0.1 percent to $1.1172, hovering near a one-week trough of $1.1159 struck on Wednesday. The common currency has lost 0.8 percent so far this week, with the Islamist State suicide bomb attacks in Brussels on Tuesday bruising sentiment.
"The euro may be slow to shrug off the impact of the terror attack, given potential for investors to price in a higher political risk premium associated with the ongoing drift towards the wings and away from centrist parties," wrote Todd Elmer, Citi's Asian head of G10 FX strategy.
The blasts in Belgium were seen as exacerbating the possibility of Britain leaving the European Union, further undermining the euro. The prospect of Britons voting for a "Brexit" at a June referendum has also struck the pound, which traded near $1.4081, a one-week low plumbed overnight. Sterling will look to the UK retail sales numbers to be released later in the session for immediate cues.
A sharp drop in crude oil prices took a toll on commodity-linked currencies like the Australian and Canadian dollars. The Aussie lost 0.3 percent to $0.7506, pulling further away from an eight-month peak of $0.7681 scaled last week. The loonie edged down to a six-day low of C$1.3244 to the dollar following a 1.2 percent drop overnight. The New Zealand dollar was on track to post its fifth straight day of losses, dipping 0.1 percent to $0.6704 to move away from a near three-month high of $0.6875 reached last week.