TOKYO, Nov 17, Reuters -- The U.S. dollar hit a new high against the yen since March 2017 and traded close to a 16 month peak against a basket of major peers on Wednesday, as a run of strong economic data boosted bets for earlier Federal Reserve interest-rate hikes.
Australia's dollar weakened after wage data failed to strengthen the case for tighter monetary policy.
The greenback was as high as 114.975 yen before changing hands at 114.755 last time.
The dollar index - which measures the currency against six rivals such as the yen - was trading at 95.871, not far from the overnight high of 95.978, a level not seen since July of last year.
The US retail sales increased more than expected in October, a report showed Tuesday. Consumer prices were at the highest level since 1990, which was the reason why consumer prices surged at the highest rate since 1990.
St. Louis Fed President James Bullard said on Tuesday that the central bank should follow a more hawkish direction over its next couple of meetings in order to prepare for inflation.
Money markets are currently pricing in a high probability of a Fed rate increase in June, followed by another in November.
The U.S. economy looks to have shaken off the Delta soft patch and is gaining forward momentum, albeit with heavy ongoing supply chain issues and reopening bottleneck, Westpac strategists wrote in a client note, recommending buying the dollar index on any dips into the low 95 level.
Hawkish comments from Bullard voter next year will leave markets comfortable with the hikes in Fed in 2022, a contrast to Europe where renewed virus suppression measures are being implemented. The euro languished near a 16 month low to the dollar as Europe suffered from worries about growth amid a renewed surge in COVID 19 cases.
Germany's parliament is due to vote on stricter measures to deal with the outbreak, while Austria imposed a lock-down on unvaccinated people at the beginning of the week. France, the Netherlands, and many countries in Eastern Europe are struggling to contain infections.
The European Central Bank President Christine Lagarde spoke later on Wednesday, after saying on Monday that tightening monetary policy to rein in inflation could choke off the euro zone's recovery.
One euro bought $1.13245, mostly flat from Tuesday, when it dipped as low as $1.1309 for the first time since July 2020.
After the government's job-protecting scheme ended on Tuesday, sterling was firm after the release of data showing British employers hired more people in October.
Consumer price data will be released later Wednesday for further support for Bank of England tightening.
The pound was as high as $1.3472 overnight and rose to a new high of $1.34335 at the end of the day.
It rose slightly to 0.8429 per euro, moving back to its strongest level this month at 0.84265, reached on Tuesday.
The Aussie dropped 0.24% to $0.7287 after wage growth came in as economists expected on Wednesday, but did nothing to sway a dovish Reserve Bank of Australia.
On Tuesady, RBA Governor Philip Lowe pushed back against market pricing for a rate hike next year, saying recent data and forecasts did not warrant such a move.
After dipping below that level for the first time this month, cryptocurrencies traded just north of $60,000. It hit a new record $69,000 on Wednesday of last week.