, on the other hand, showed a moderate rise last month, posting the smallest annual increase in producer inflation in more than two years, further evidence that inflation pressures were easing.
"I think the market is starting to rethink the outlook for the Fed cutting rates after inflation, while lower, remained on the high side. The dollar stands to gain if markets pull rate cuts off the table, a scenario that would allow it to retain its yield advantage for longer," said Joe Manimbo, senior market analyst, at Convera in Washington.
The dollar index , which tracks the U.S. currency against six major peers, rose 0.7% to 102.06, its highest showing in more than a week.