The dollar rose on Tuesday as a top U.S. Federal Reserve official voiced support for an interest rate increase in September despite a batch of disappointing data on wages and manufacturing activity.
Atlanta Fed President Dennis Lockhart told the Wall Street Journal said it would take "significant deterioration" in the U.S. economy for him to not support a rate hike in September.
Lockhart is a voter this year on the Federal Open Market Committee, the Fed's policy-setting group. He has a reputation as a centrist and has sided with Fed Chair Janet Yellen on her policy stance.
"He is seen as a swing vote and he has become increasingly hawkish," said Ian Gordon, G10 currency strategist at Bank of America Merrill Lynch in New York.
Lockhart's remarks jolted the dollar, which had been stuck in a narrow range against most currencies and whose earlier losses had boosted currencies closely linked to commodities.
The dollar index was up 0.4 percent at 97.96, wiping out earlier losses.