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MORNING BELL: Dollar rallies on rate hike view as euro skids

The dollar hovered at its highest in over a week against all major currencies early on Wednesday, a day after its biggest one-day bounce this month as the market's focus shifted from Greece to prospects for higher U.S. interest rates. Reasonably positive U.S. data and comments from Federal Reserve Governor Jerome Powell, who said he was prepared to raise interest rates twice this year, helped sustain a rally in Treasury yields and the USD.

A surge in sterling on robust British economic data and safe-haven demand due to the situation of Greece, raised questions over whether the Bank of England will begin increasing interest rates as quickly as some anticipate.

Market expectations, as indicated by the sterling's overnight indexed swaps curve, suggest the BoE will follow the U.S. Federal Reserve to become the second major central bank to increase interest rates from their crisis-era lows.

Oil futures settled near a two-week high on Tuesday, with analysts attributing the bounce to technical price triggers, expectations for a weekly decline in U.S. crude supplies and a U.S. plan to help Europe defend against security threats, which highlight U.S. tensions with Russia.

European stocks advanced Tuesday, with expectations for a long-awaited deal between debt-burdened Greece and its creditors might finely take shape.

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