Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle recently noted the central bank was now often buying more bonds in a week than the government was selling.
After falling 4% in the last quarter of 2020, the dollar has strengthened by nearly 2.5% year-to-date as investors expect the broad rise in US bond yields to weigh on stretched equity valuations and boost demand for the US currency.
The dollar index stood at 92.30 against a basket of six major currencies, up 0.4%, its highest level since late-November.
The unit had managed a one year high of 14.4050 early last week but has retreated since as investors reassessed likely rate moves in the United States.
Yields on 10-year US government bonds touched one-year highs.
"Rising US yields have stopped the dollar from declining for now," said Osamu Takashima, the Tokyo-based head of G10 FX strategy at Citigroup Global Markets Japan.
South Korea stocks slid 1.2% to a one-week low as daily coronavirus cases rose by another 621, unchanged from a day earlier when it marked the highest level in 39 days.
The dollar extended its rebound from near three-year lows against major peers, supported by higher US yields, as President-elect Joe Biden prepared to outline his plans for massive fiscal stimulus.
Trump bolstered a ban on US investments in Chinese companies deemed to be linked with the military by clarifying late on Wednesday that American investors cannot own them after November 2021.