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The dollar was on the back foot on Thursday, though it drew some support from higher U.S. Treasury yields as traders contemplated the possibility of another rate hike by the U.S. Federal Reserve, even if it pauses next week.

The increased expectations that U.S. and global interest rates may have further to rise has come on the back of surprise rate increases by the Bank of Canada (BoC) and the Reserve Bank of Australia (RBA) this week.

The BoC on Wednesday hiked its overnight rate to a 22-year high of 4.75% after a four-month pause, while the RBA on Tuesday similarly raised interest rates by a quarter-point to an 11-year high and warned of more to come.

The Canadian dollar was last steady at C$1.3365 to the greenback, after rising to a one-month top of C$1.3321 in the previous session.

"Canada's central bank is viewed as one of the leaders when it comes to being proactive with monetary policy," said Edward Moya, senior market analyst at OANDA.

"The BoC is signaling that more rate hikes could come and that has everyone rethinking that the Fed will be done after the July hike."

Elsewhere, the U.S. dollar edged broadly lower in early Asia trade, with sterling rising 0.08% to $1.2449, while the euro similarly gained 0.08% to $1.0707.

European Central Bank policymakers had on Wednesday struck a hawkish tone and guided that more rate hikes are on the horizon, with interest rates likely to stay higher for longer.

Against the yen, the greenback slipped 0.21% to 139.85, with the Japanese currency buoyed by Thursday's data showing Japan's economy grew an annualised 2.7% in the first quarter, much higher than the initial estimate for a 1.6% expansion.

The U.S. dollar index dipped slightly to 104.02, though strayed not too far from an over two-month high hit last week, on the back of higher Treasury yields.

The two-year Treasury yield, which typically moves in step with interest rate expectations, last stood at 4.5479%, after touching an over one-week high of 4.604% in the previous session.

The benchmark 10-year yield was last at 3.7914%, having risen roughly 10 basis points to peak at 3.801% on Wednesday.

Money markets are pricing in a 29% chance that the Fed raises rates by 25bps at its policy meeting next week.

"Markets have raised their FOMC rate hike expectations following a surprise Bank of Canada rate hike," said Carol Kong, a currency strategist at Commonwealth Bank of Australia. "The Funds futures market is pricing an 81% chance of a 25bp FOMC hike by July."

CHINA SLUMP

In Asia, the Chinese offshore yuan was pinned near a more than six-month low at 7.1469 per dollar, after having slid to 7.1527 in the previous session, its lowest since late November.

Data released on Wednesday showed China's exports shrank much faster than expected in May while imports extended declines, raising doubts about the country's fragile economic recovery.

"To some extent, it's a view that the trade data's another symptom of a faltering recovery," said Ray Attrill, head of FX strategy at National Australia Bank.

The Aussie was last 0.18% higher at $0.6665, having slipped nearly 0.3% in the previous session, while the kiwi rose 0.22% to $0.6050, reversing some of Wednesday's 0.7% fall.

Both antipodean currencies are often used as liquid proxies for the Chinese yuan.

In other currencies, the Turkish lira slumped to a record low of 23.39 per dollar.