The Aussie lapsed to $0.7273, and further away from the week’s peak of $0.7440. That took it back under the 200-day moving average at $0.7318 and put the near-term focus on support around $0.7245.

The kiwi dollar was left at $0.6805, having recoiled all the way from Monday’s top at $0.6926. Support now lies at $0.6800 and $0.6767.

Both eased on the euro which rallied to A$1.4986 and away from a four-year trough of $1.4554 touched on Monday, though it remains far below the A$1.5900 level held just a couple of weeks ago.

Global commodity prices steadied after their recent surge as investors sought some sense of how long the Russian-Ukraine conflict might last.

Reserve Bank of Australia (RBA) Governor Philip Lowe warned the jump in commodity prices would likely lift inflation further and could feed through to wage claims.

Yet he also emphasised that the RBA had scope to be patient on hiking interest rates, and it was plausible a move would come later this year.

Westpac’s latest consumer survey showed inflation and Ukraine had hurt sentiment this month, though bank data on card spending stayed strong.

Markets are wagering a first hike to 0.25% could come as early as June should the consumer price report for the first quarter be as strong as analysts now expect.

Among the major local banks the difference in timing has narrowed to a few months, with CBA tipping a first rise in June, Westpac and NAB in August and ANZ picking September.

Futures are pricing in a string of hikes to 2.0% by May next year, while swaps imply a top for the cycle at 1.75-2.0%. The RBA’s Lowe has said he wanted to see real rates turn positive which would imply a cash rate above 2.5%.

CBA economist Stephen Wu thinks the peak could be as low as 1.25%, in part because Australian households hold record amounts of debt and rising mortgage bills will hit hard.

“A lower, likely negative, real neutral rate means it is likely this tightening cycle will be shallow,” he argued. “We expect the RBA to lift the cash rate to 1.25% by Q1 2023 and hold it there over the rest of our forecast horizon which extends to end-2023.”

The dollar index, which measures the currency against a basket of six rivals, reached its highest since mid-July 2020 on Wednesday at 96.226, but was last down 0.146% at 95.647.

"At this point it really feels like we're consolidating around near-term spikes for the dollar," said Boris Schlossberg, managing director of FX strategy at BK Asset Management. "The dollar has had a full rally and now the market is going to step back an assess if indeed the inflation theme continues at the pace that everybody thinks it will."

"If that's true, then there's nothing stopping it, but I think if the numbers start to print a little cooler as we go forward, you'll definitely see a bit of a dollar pullback across the board."

Recent U.S. data showed inflation running in October at its hottest since 1990, while retail sales numbers topped forecasts, leading the market to price in earlier rate hikes by the Federal Reserve than had been anticipated, driving strength in the greenback.

"The sustainability of the current dollar strength beyond the next few months looks far from certain," said Luc Luyet, FX strategist at Pictet Wealth Management.

"Market expectations of the Fed are starting to be particularly hawkish, suggesting limited tailwinds for the U.S. dollar going forward from that factor."

The euro, rose 0.32% to $1.13545, bouncing off of a 16-month low hit on Wednesday below $1.13.

Sterling, which jumped 0.5% against the greenback on Wednesday after data showing rising inflation in Britain last month piled pressure on the Bank of England to hike rates at its meeting next month, gave back some gains and was last down 0.08% at $1.3477.

Rate bets rule currency markets as dollar shines; euro, Aussie sag

The New Zealand dollar rose 0.31% to $0.7020 after a central bank survey showed near-term inflation is expected to rise in the fourth quarter.

Elsewhere, Turkey's lira shed another 3.3% to above 11 per dollar after the central bank cut rates by 100 basis points to 15%, even in the face of inflation near 20% and the Turkish currency hurtling southwards.

The lira has lost around 11.5% of its value this month amid President Tayyip Erdogan's renewed criticism of interest rates and calls for stimulus despite the risks. It was last at 10.955, having earlier hit a record low of 11.30 per dollar.

Commodity-linked currencies were hurt by oil prices, which slumped to near six-week lows.

The Canadian dollar was at a six-week low. Markets are expecting the Bank of Canada to start raising interest rates early next year. The Norwegian Crown also fell.

The Australian dollar touched a six-week low of $0.7251 and was last down 0.1% at $0.72575.