SYDNEY: The US dollar was back on the front foot in Asia on Wednesday after the latest batch of US economic data supported the Federal Reserve's recovery view and lifted US Treasury yields.
The dollar index rose 0.4 percent to 82.680 , having bounced off a low of 82.241 after data showed strong gains in business spending plans and a solid rise in house prices.
The reports came just days after Fed Chairman Ben Bernanke said the central bank could start to slow the pace of its bond-buying stimulus later this year if the economy stayed on its recovery path.
"Overall these data align with the Federal Reserve's assessment that the US economy is improving modestly, and specifically over the past two weeks, US economic data has by and large beaten consensus forecasts," said Christopher Vecchio, analyst at DailyFX.
The dollar popped back above 98.00 yen, pulling away from this week's low of 96.95 and well away from this month's trough of 93.75.
The euro fell to $1.3075 from Tuesday's session high of $1.3151, bringing into view chart support at $1.3034, a level representing the 61.8 percent retracement of its May 17-June 19 rally.
The common currency was further hampered by comments from European Central Bank President Mario Draghi, who said the bank was nowhere near exiting its accommodative monetary policy.
The diverging policy views between the two major central banks could weigh on EUR/USD, traders said.
Commodity currencies also lost a bit of ground against the broadly firmer greenback, although the Australian dollar is showing signs of finding a base following its 11-percent drop since May.
The Aussie traded at $0.9263, after ending almost flat on Tuesday. Still, it remained within touching distance of a 33-month low of $0.9148. Initial support is seen at $0.9143, the 38.2 percent retracement level of its 2008 to 2011 rally.
Also helping to underpin the Aussie, China's central bank on Tuesday assured markets it would provide cash to institutions that need it.
It was an attempt to ease concerns about a self-engineered liquidity squeeze that threatened to slow the economy further still. China, Australia's single biggest export market, is trying to cool down lending.
Asia again has no major economic data to speak of on Wednesday, leaving markets to keep a wary eye on the regions' major stock markets and further development in China's money market.
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