- Dollar supported as cooling risk aversion lifts US yields
- Pound hovers at 7-month low, BoE meeting awaited for cues
- Kiwi slips to 6-month trough on NZ's lacklustre GDP data
(Adds details and quotes, updates prices)
The dollar hovered near an 11-month high against a basket of currencies on Thursday, supported by a rise in U.S. yields, while the pound was at its lowest level since November 2017 ahead of a Bank of England monetary policy decision.
The dollar index .DXY against a group of six major currencies stood at 95.243 after rising to 95.299 overnight, its highest since mid-July 2017.
Buoying the greenback, long-term Treasury yields bounced back from three-week lows, as risk aversion felt earlier in the week amid United States-China trade tensions eased for now.
Treasury yields also were propped up by remarks from Federal Reserve Chairman Jerome Powell, who said on Wednesday that the U.S. central bank should continue with a gradual pace of rate increases.
"Powell's remarks were not particularly ground breaking but it appears to have helped the dollar just as U.S. equities are recovering after being oversold on earlier risk aversion," said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.
The dollar rose 0.2 percent to 110.585 yen JPY= , moving further ahead from a one-week low of 109.55 struck on Tuesday.
The euro was a shade lower at $1.1567 EUR= having a lost 0.15 percent the previous day.
The pound stood little changed at $1.3167 GBP=D3 after slipping overnight to a seven-month low of $1.3145.
Sterling managed to move away from the seven-month low after British Prime Minister Theresa May won a crucial Brexit vote in parliament, averting a rebellion that could have undermined her authority.
But the bounce by the pound was limited ahead of the BoE's policy-setting meeting later on Thursday, which is expected to set the currency's near-term direction as the central bank weighs the prospects of a interest rate hike.
The BoE is widely expected to stand pat and focus is on how strong the signals are for the possibility of rate increases at the next policy meetings in August and December.
The Australian dollar was effectively flat at $0.7371 AUD=D4 , after it managed to crawl off a 13-month trough plumbed earlier this week on the back of the U.S.-China trade conflict.
The New Zealand dollar retreated to a six-month low of $0.6832 NZD=D4 after domestic data which showed slowing first quarter economic growth boosted expectations that the central bank would keep interest rates low.
The Mexican peso MXN=D2 was steady after climbing more than 0.8 percent overnight, helped by expectations that the country's central bank will raise interest rates on Thursday.
The peso has extended a rebound from 1-1/2-year low it hit last week when it was dented by a broad dollar rally, a deadlock in talks around the NAFTA free trade deal and nervousness ahead of Mexico's July 1 presidential election.
In contrast, Brazil's real BRBY is expected to come under pressure after that country's central bank refrained from tightening monetary policy again on Wednesday.
The real has lost 5 percent this month and brushed its lowest level since March 2016.
The tariff feud between China and the United States has added to woes for emerging markets, already under pressure due to steadily rising U.S. interest rates.
"The decline by emerging market currencies and stocks has been a key risk-off theme over the past few weeks, only offset by positive effects U.S. tax cuts are having on the global economy," said Makoto Noji, senior strategist at SMBC Nikko Securities.
