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 Bullard, speaking on CNBC, also said the U.S. central bank, where he
is currently a non-voter on policy, should next month drop its
reference to "patience" in describing its approach to tightening
monetary policy.
The dollar strengthened to a day's high of $1.1315 per euro in
response but remains bang in the middle of ranges it has held
against the single currency for the past month, prompting some
doubts over how fast further rises may arrive.
"Some of the euro stops have gone on this," one London-based dealer
said.
The Australian and New Zealand dollars had been the main movers
among major currencies in Asian and European trading, pushed in
opposite directions by contrasting signals on the health of two
economies which are struggling.
The Aussie fell as much as half a percent against the dollar, the
euro and yen before recovering some poise in morning trade in
Europe, after unexpectedly weak business investment numbers in an
economy striving for growth.
The kiwi dollar by contrast gained 0.4 percent against both the
dollar and yen after data showed a surprise surplus on trade.
"In Australia people knew the mining numbers would be weak but were
expecting construction investment to make up for that. When it
didn't we saw the reaction on the (Aussie) dollar," said Adam Myers,
European head of FX strategy at Credit Agricole in London.
There was little impact on the euro from a handful of European data
releases, including signs that falls in bank lending may finally be
coming to an end.
Two much-awaited days of testimony from Fed chief Janet Yellen have
done little to move on the debate over when U.S. rates will rise, if
anything pushing expectations back to later in the second half of
this year.
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"Janet Yellen has done a fair bit in recent days both to help stop
the dollar's advance and to suck volatility out of the FX market,"
Kit Juckes, a strategist with French bank Societe Generale in
London, said.
"The prospect of a shift in Fed policy promises a move to a
sustained period of higher volatility, but the talk of patience, and
the emphasis on flexibility when the Fed finally acts, soften that
effect."
The U.S. inflation numbers are due at 8.30 a.m. ET. "If we get a
surprise on CPI, if the core is lower for example, then the euro is
going to go higher," Myers said.
"There are a lot of people who have been short (of euros) for a
while and are just going 'come on, come on'. A move higher on the
euro and you will see more of them close out."
The dollar was steady at 118.88 yen.
(Editing by Toby Chopra and Jane Merriman)
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