Investing.com - The dollar was trading close to three- month highs against the other major currencies on Thursday after Federal Reserve officials indicated that a U.S. interest rate hike next month is possible.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 98.00, not far from overnight peaks of 98.24.
The dollar rallied on Wednesday after Fed Chair Janet Yellen said that the U.S. economy was performing well, and that December would represent a “live possibility” for raising interest rates if upcoming economic data supported it.
Separately, New York Fed President William Dudley said he would "completely agree" with Yellen that December is a "live possibility" for a rate lift-off.
The dollar had already been boosted after data on Wednesday showing that hiring in the U.S. private sector posted solid growth in October.
Separate reports showed that the U.S. trade deficit fell to a seven-month low in September as exports rebounded, while service sector activity grew at a faster than expected rate last month.
Payroll processing firm ADP said the U.S. private sector added 182,000 jobs last month, ahead of forecasts for growth of 180,000.
The Commerce Department said the trade deficit fell 15% to $40.8 billion in September, the smallest deficit since February as exports rose 1.6%.
Also Wednesday, the Institute of Supply Management said its non-manufacturing purchasing manager's index rose to 59.1 last month from 56.9 in September, well ahead of above forecasts of 56.5.
The robust data indicated that the economy is on a strong enough footing to support higher interest rates.
Investors were turning their attention to Fridays U.S. nonfarm payrolls report for indications on the likelihood of a December rate hike.
The euro was near three month lows, with EUR/USD last at 1.0869.
The dollar also hit three-month highs against the yen, with USD/JPY rising to 121.84 overnight.
GBP/USD was little changed at 1.5388 ahead of the Bank of England’s rate announcement and quarterly inflation report later in the session, while USD/CHF was close to eight-month peaks at 0.9958