Dollar Rallies to New High as Euro Sags Below $1.11

The dollar climbed to fresh highs on Wednesday, getting lift from solid U.S. jobs and business data, as the euro sank below $1.11 to an 11-1/2 year low ahead of the launch of quantitative easing by the European Central Bank.

The dollar, bolstered by recent rises in U.S. government bond yields, hit its highest since September 2003 against a basket of currencies and was last up 0.60 percent at 95.957. Earlier it struck a high of 96.041 in trading after economic data releases.

The ADP National Employment Report showed a gain of 212,000 private-sector jobs. Economists surveyed by Reuters had forecast the ADP to show a gain of 220,000 jobs.

Separately, the Institute for Supply Management said its services index was 56.9 in February, up slightly from 56.7 in January. Analysts were looking for a reading of 56.5, according to a Reuters poll.

The ADP data likely signaled strength in Friday's potentially markets-moving government jobs report for February, according to Camilla Sutton, chief currency strategist at Scotiabank in Toronto.

"What's really important now is that we get a non-farm print on Friday that comes close to that 235,000 that is expected, or higher," Sutton said. "That will keep the expectations for a Fed interest rate hike fairly near term. For the U.S. dollar that is key."

The euro last stood at $1.1072, off 0.90 percent for the day and below a key support level, Sutton said. It fell to as little as $1.1066, which was the lowest level for the euro against the dollar since September 2003, according to Thomson Reuters data.

The euro also declined to one-month lows against the Japanese yen , which was flat against the dollar at 119.72 yen to the dollar.

The ECB is expected to announce on Thursday details of its planned 1.1 trillion euro bond-buying program, meant to spur European economies as the Fed readies to raise its rates for the first time since 2006.

There has been more momentum behind the greenback in the past week after a month of mediocre data which had left it struggling to build on six months of gains against all of its major currency peers.

The dollar index has gained about 6.3 percent so far this year, helped by the U.S. economy's better performance against other major world economic regions and relatively higher U.S. yields. (Additional reporting by Francesco Canepa and Anirban Nag; Editing by Toby Chopra and Christian Plumb)