FOREX-Dollar gains against euro, yen on strong economic data
* Strong Empire State and PPI figures help dollar rally
* Fed's Beige Book points to continued U.S. growth
* Canadian dollar hits fresh four-year low against dollar
By Curtis Skinner
New York, Jan 15 (Reuters) - Strong U.S. regional manufacturing and price data lifted the dollar on Wednesday, boosting it against most major currencies, while the Canadian dollar weakened to a fresh four-year low.
The dollar was up 0.44 percent against a basket of six currencies to 81.013. The greenback rose 0.4 percent to 104.62 yen, building on Tuesday's recovery, when it rallied more than 1 percent.
The economic data caused bond prices to fall, pushing U.S. Treasury yields higher. Rising yields often results in gains in the dollar index.
The euro was down 0.56 percent against the dollar at $1.3603 , hitting a session low after U.S. producer prices recorded their largest increase in six months in December. Core U.S. producer prices, which exclude volatile food and energy costs, are up 1.4 percent on a year-over-year basis, a still benign level of wholesale pressure.
A separate report showed manufacturing activity in New York state jumped to its highest level in 20 months in January.
Investors quickly brought forward the likely timing of the first Fed rate hike to August 2015 , having only just pushed it out towards the back end of 2015 in the wake of Friday's jobs numbers.
"The data that we've seen since the payrolls report Friday has been quite positive, and I think suggests that Friday's payrolls report was more of an outlier or aberration than any signal that we're seeing a broad slowdown of the U.S. economy," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.
The U.S. dollar hit a fresh four-year high against its Canadian counterpart of C$1.0991. The greenback was last up 0.09 percent to C$1.0952.
The euro peaked near its four-year high against the Canadian dollar at C$1.4988, with the latter under broad pressure after recent weak data raised concerns about whether the Bank of Canada may sound more dovish next week. It was last down however, 0.48 percent at C$1.4897
Also helping underpin the dollar, two of the Federal Reserve's most hawkish policymakers who take up voting power this year said Tuesday the central bank should bring its bond-buying program to a swift close.
The afternoon saw the Fed publish its Beige Book - an anecdotal report on business activity nationwide. The report said the U.S. economy continued to grow at a moderate pace from late November through the end of 2013, with two-thirds of the 12 Fed districts reporting increases in hiring.
The euro steadily dropped throughout the day against the U.S. dollar, ahead of Thursday's release of inflation figures out of Germany.
"For the euro side of the equation, there's a tremendous risk in the euro CPI. Should that disappoint tomorrow, that puts the ECB in an awkward position," said Camilla Sutton, chief currency strategist at Scotiabank.