Investing.com - The dollar was trading close to seven-week highs against a basket of the other major currencies on Thursday after the latest hawkish comments from a Federal Reserve policymaker underlined expectations for a rate hike later this month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% at 101.89 at 08.40 GMT. The index touched an overnight high of 102.00, its highest since January 11.
An improving global economy and a solid U.S. recovery mean it will be "appropriate soon" for the Fed to hike rates Fed Governor Lael Brainard said on Wednesday.
Coupled with the comments of other Fed officials in recent days, and looking ahead to a speech by Fed chair Janet Yellen on Friday, Brainard's remarks reinforced expectations that the next U.S. rate hike will come at the Fed’s March policy meeting.
Futures traders are now pricing in around a 75% chance of a Fed hike in March, up from around 25% at the start of the week, according to Investing.com’s Fed Rate Monitor Tool.
Odds of a second rate hike in September currently stand at 63%, while a third hike in December is priced in at 53%, aligning market expectations with the Fed's current forecast for three rate hikes in 2017.
The dollar climbed to two-week highs against the yen, with USD/JPY rising 0.48% to 114.27.
The euro edged lower, with EUR/USD dipping 0.12% to 1.0535, not far from the one-week low of 1.0513 set on Wednesday.
Sterling was at six-week lows against the dollar, with GBP/USD at 1.2287 after a UK manufacturing survey on Wednesday added to fears over the impact of the Brexit vote on the economy.
Meanwhile, the Australia dollar was weaker, with AUD/USD down 0.34% at 0.7649 after data showing that the country’s trade surplus shrank unexpectedly in January as exports dropped.