Illustration shows U.S. Dollar banknote
U.S. Dollar banknote is seen in this illustration taken July 17, 2022. Reuters

The dollar regained its footing on Thursday ahead of key U.S. inflation data due later in the day, while cryptocurrencies were fragile after a bailout deal for exchange FTX by its bigger rival Binance collapsed.

The greenback surged overnight against its peers and held to those gains in early Asia trade, pushing the Japanese yen away from a roughly two-week high hit in the previous session. The yen last bought 146.28 per dollar.

The euro hobbled just above parity at $1.0016, some distance from its near-two-month high hit earlier in the week. Sterling last stood at $1.1360, after sliding 1.6% overnight.

Investors now have their eyes on the closely watched U.S. inflation figures due later on Thursday, in which a strong price rise would likely reinforce the Federal Reserve's aggressive campaign in tightening monetary policy.

Economists polled by Reuters expect the annual rise in the headline consumer price index to land at 8% for October.

"Up until yesterday ... the market looked as though it was going to be positioned for a lower-than-expected data, which I thought was pretty dangerous, given that five of the last six months have produced upside surprises," said Ray Attrill, head of FX strategy at National Australia Bank (NAB).

"I think that there's every chance we'll see a more extended correction in risk assets if we did see an upside surprise, because the market would be forced to price the Fed either higher, or higher for longer."

The dollar has lost some steam over the past few weeks on hopes that the Fed could scale back on its hefty interest rate hikes as soon as December.

Against a basket of currencies, the U.S. dollar index was firm at 110.30, after rising nearly 0.8% overnight.

The risk-sensitive Aussie was last up 0.05% at $0.6434 while the kiwi gained 0.11% to $0.5890. Both had fallen over 1% overnight.

The greenback also received a leg up from a crypto fallout that soured risk sentiment and as U.S. stocks tumbled overnight, on results showing that Republican gains in the midterm elections appeared more modest than some expected.

In the latest turn of events in the crypto world, FTX Chief Executive Officer Sam Bankman-Fried told employees he was exploring all options for his firm after a stunning bailout deal with its rival exchange Binance collapsed on Wednesday.

Just a day earlier, crypto giant Binance had signed a nonbinding agreement to buy FTX's non-U.S. unit to help cover a "liquidity crunch".

"I do think there's been a bit of contagion from what's been going on in crypto to the broader markets .... It does seem to be having something of an unsettling effect," said NAB's Attrill.

FTX's native token, FTT, was last 28.35% higher at $1.947, though its month-to-date loss is more than 90%.

Bitcoin rose 2% to $16,207, after falling to a two-year low of $15,632 in the previous session.