The dollar held firm on Tuesday, extending its rebound for a second session after several Federal Reserve officials in separate appearances supported the case for a hike in interest rates at the next Fed meeting in April.
The U.S. central bank surprised investors last week by lowering its outlook for rate increases in 2016 and sounded a note of caution on an unstable global economy. That triggered heavy selling from traders betting on a stronger dollar.
Atlanta Fed President Dennis Lockhart said on Monday that there has been "sufficient momentum" in the U.S. economy to justify a rate hike as early as next month. That bolstered the dollar, which hit session highs against the euro and Japanese yen after his comments.
According to Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc. in Washington, "April is certainly sooner than many were expecting, considering it's not a meeting where we'll have a post-meeting press conference."
Dollar Up, Euro Down
The dollar rose 0.25 percent against the yen to 111.83 yen; the euro fell 0.2 percent against the dollar to $1.1246. All three U.S. stock indexes posted small gains overnight.
Asian stocks fluctuated on Tuesday in reaction to the hawkish comments with MSCI's broadest index of Asia-Pacific shares outside Japan moving down for much of the session but settling up 0.1 percent. China stocks slipped, with the CSI300 index dropping 0.6 percent, while the Shanghai Composite Index lost 0.4 percent and Japan's Nikkei stock index added 1.9 percent. The Australian dollar firmed, rising 0.4 percent to US$0.7603 .