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Euro steadies, kiwi hits 2-1/2 year high

Sean Gallup | Getty Images

The dollar edged higher against the euro and the yen on Thursday after upbeat U.S. economic data, while the New Zealand dollar hovered near a 2-1/2-year high after economic data and hints that the country's central bank could raise interest rates.

The Commerce Department said U.S. fourth-quarter gross domestic product rose at a 2.6 percent annual rate, up from the 2.4 percent pace reported last month. The Labor Department, meanwhile, said initial claims for U.S. state unemployment benefits dropped to the lowest since November.

The data put the U.S. Federal Reserve "squarely on pace" to continue cutting its monthly asset purchases and raise short-term interest rates in the first half of 2015, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Investors had bought the dollar last week after Fed Chair Janet Yellen suggested the possibility of raising interest rates early next year, or about six months after its current bond-buying program ends.

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The dollar got another boost against the euro on Tuesday, when European Central Bank policymakers hinted at a softening of monetary policy. The ECB holds its next policy meeting on April 3.

The U.S. dollar index, which measures the dollar against six major currencies, was last flat near 80.05. The euro was last down 0.3 percent against the dollar at $1.37, while the dollar was last up 0.15 percent against the Japanese yen at 102.2.

The New Zealand dollar hovered near a a 2-1/2 year high of $0.87, which it hit earlier in the day on a sharp rise in the country's trade surplus for February and a policymaker's comments signaling that the country could tighten monetary policy further by raising interest rates.

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