The dollar reached an 11-month high against the yen and stood tall against other peers on Thursday, boosted by new upbeat US data and comments from Federal Reserve Chairman Jerome Powell that were seen as hawkish.

The dollar stretched an overnight rally to touch 114.55 yen, its highest since early November 2017. A rise above 114.735 yen would take the US currency to its highest level since mid-March 2017.

Adding to the bullish mood for the dollar, Fed Chairman Powell said on Wednesday that the central bank may raise interest rates above an estimated “neutral” setting as the ”remarkably positive” US economy continues to grow.

The upbeat mood was boosted by news the Institute for Supply Management's (ISM) non-manufacturing activity index jumped 3.1 points to 61.6 last month, the highest reading since August 1997.

The ADP National Employment Report also showed private payrolls jumped by 2,30,000 jobs in September, the largest gain since February. “The dollar stands to outperform together with the rise in long-term Treasury yields ahead of Friday's non-farm jobs report, possibly reaching the 115.00 yen handle,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.

“The Trump administration could turn its attention to the dollar and check its rally. But any slowdown by the dollar is likely to be temporary, as the Trump administration has in effect allowed the currency to strengthen under its economic policies.” US President Donald Trump has on several occasions expressed displeasure at the dollar's strength.

The dollar index against a basket of six major currencies stood at 96.065 after climbing to a six-week peak of 96.116 overnight. US Treasury yields jumped to multi-year peaks on Wednesday, with the 10-year yield reaching a seven-year high after Wednesday's robust data bolstered the case for the Fed to raise interest rates again in December and beyond.

The euro was flat at $1.1477 after slipping about 0.6 per cent on Wednesday. Before caving in to the dollar's broad surge, the single currency had climbed to $1.1594 earlier on Wednesday on reports that Italy plans to reduce its budget deficit over the next three years. The pound was steady at $1.2941 following a dip overnight to a three and a half week low of $1.2925. The Australian dollar extended overnight losses, slipping to a three-week trough of $0.7096.

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