* Dollar rises, trades near highs versus euro, yen
* Euro zone inflation data could add to rate cut worries
* US Fed's Plosser reiterates need to slow asset purchases
* More Fed speakers due later; Aussie hits 11-month low
By Jessica Mortimer
LONDON, May 16 The dollar was near a six-week
high against the euro and a 4-1/2 year peak against the yen on
Thursday on prospects for more monetary easing in the euro zone
and scaled back asset buying in the United States.
Final euro zone inflation data for April due at 0900 GMT is
expected to be weak, reinforcing expectations the European
Central Bank could cut interest rates, with the potential for it
to opt for a negative deposit rate.
By contrast, Federal Reserve policymaker Charles Plosser
again called for the central bank to cut asset purchases in a
speech in Italy.
The euro fell 0.3 percent at $1.2846, near a six-week
low of $1.2843 hit on Wednesday after data showed the euro zone
contracted for a sixth consecutive quarter.
Against a basket of currencies, the dollar was up 0.1
percent at 83.935, hovering just shy of the 2012 peak of 84.10.
"The only thing driving currencies at the moment is that we
are in an environment where stronger U.S. growth is positive for
the dollar via the Fed tapering argument," said Adam Cole,
global head of FX strategy at RBC.
But he said the dollar risked a correction given that at
least some Fed policymakers due to speak later were more dovish
and the possibility of weak U.S. inflation data and a business
survey of the mid-Atlantic region later on Thursday.
Against the yen the dollar was up 0.15 percent at
102.41 yen, near a peak of 102.77 yen hit on Wednesday, its
strongest since late 2008.
Traders reported Japanese importer buying and said investors
were eager to buy dips in the dollar, which was expected to gain
further while the yen continued to weaken in the wake of
aggressive Japanese monetary easing announced in early April.
"People will be watching statements from officials today and
Bernanke at the weekend very closely for hints on when they (the
Federal Reserve) might exit," said Yoshio Takahashi, currency
strategist at Barclays in Tokyo.
Commodity currencies fell sharply, with the Australian
dollar falling 1 percent to an 11-month low of $0.9806.
The New Zealand dollar hit a six-month low of $0.8147.
RBC's Cole said when the dollar moved higher
commodity-linked currencies tended to be the hardest hit because
dollar strength often feeds through into commodity price