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LONDON, Feb 23 (Reuters) – The dollar index rose to its highest in nearly seven weeks on Thursday, a day after minutes from the Federal Reserve’s last policy meeting that supported, but did not add to markets’ view the central bank will raise rates further.The index , which tracks the greenback against six major peers touched 104.68, its highest since Jan. 6, in late morning in Europe, before trading just below that level steady on the day.The euro , the largest component of the index, briefly touched $1.0586, also its lowest since early Jan, largely unaffected by euro zone inflation data that came in a touch higher in January than earlier estimated, confirming that price growth is now well past its peak.Underlying price pressures still show no signs of abating however.The dollar sat at 134.94 Japanese yen , just off its two-month top of 135.2 reached on Tuesday.Latest UpdatesView 2 more stories The dollar index climbed 0.36% on Wednesday as minutes from the Jan. 31-Feb. 1 Federal Open Market Committee (FOMC) meeting showed nearly all policymakers favoured a slowing in the pace of interest rate hikes, but they also indicated curbing unacceptably high inflation would be the “key factor” in how much further rates need to rise.The impact of the minutes was slightly lessened as the meeting preceded a series of indicators released in February, most notably jobs data, that showed the U.S. economy is performing well, leaving the Fed greater scope to raise rates to bring down inflation.Traders of futures tied to the Federal Reserve’s policy rate largely stuck to the view the central bank will keep raising rates by a quarter of a point at its next three meetings.The recent increase in these expectations has caused the dollar index to rise steadily from a low of 100.8 in early February. But it is still well off its 20-year top of 114.78 hit last October – a time of fear about the health of the global economy, and when the Federal Reserve was raising rates more aggressively than other central banks around the world.“I think that after the ‘popping’ of the dollar bubble, we’re in a new phase for the dollar which we call the ‘chop’ where the market reassesses some of the reasons why it was so negative on the dollar – there was complacency about the Fed and the market was pricing in too many cuts for this year – which is now getting washed out,” said Paul Mackel global head of FX research at HSBC.“But once that becomes more complete, and we get further signs that the global economy is doing better, we’ll go into the next stage for the broader dollar: the ‘flop’”Elsewhere, sterling was a whisker lower at $1.2029, the Swiss franc was also a touch softer at 0.9318 per dollar, and the Australian dollar was a rare gainer in the G10 pack, up 0.4% to $0.6833, having slid to a near seven-week low of $0.6795 on Wednesday.Simon Harvey, head of FX analysis at Monex Europe, said the rare lull in volatility reflects markets’ comfort with current expectations for central bank policy.”So the rates dynamic is starting to take a back seat temporarily before the next batch of data and central bank commentary comes through.””Until then, there will be more idiosyncratic stories, for example tomorrow we have Ueda speaking in front of parliament in Japan, and other smaller bits of data, like person consumption data from the US tomorrow, will have an outsized impact.”Incoming Bank of Japan Governor Kazuo Ueda will speak in parliament on Friday and next Monday, with investors looking for clues on how soon the BOJ could end its bond yield control policy.Reporting by Alun John, additional reporting by Lucy Raitano in London and Rae Wee in Singapore; Editing by Lincoln Feast, Sharon Singleton and Chizu NomiyamaOur Standards: The Thomson Reuters Trust Principles.

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