The dollar rose on Wednesday, boosted by a stronger-than-expected gain in New York area manufacturing which eased fears that a slowdown in the U.S. economy would deepen. A surprise gain in the New York Federal Reserve's Empire State manufacturing index helped the dollar solidify a broad rebound that began overnight and reversed the prior day's losses on soft U.S. wholesale inflation and retail sales data. That prompted a bout of short-covering and caused some to think twice about betting that slower U.S. growth means the Fed's next interest rate move is likely to be a cut. "When you look at the (Empire State report's) components, you see that not only was the headline number strong, but prices paid and employment were higher than expected too," said George Davis, senior currency strategist at RBC Capital Markets in Toronto. With key consumer price data due on Thursday, Davis said "I think there's going to be a bit of reticence from investors" going into the report expecting a weak number. Midmorning in New York, the euro was down nearly 0.2 percent at $1.2790. The dollar was up almost half a percent at 118.14 yen , erasing losses after a report on Tuesday showed surprisingly robust Japanese third-quarter growth. After the dollar fell to around 117.30 yen the prior session, analysts said investors were reluctant to chase the Japanese currency higher until they hear what Bank of Japan Governor Toshihiko Fukui says about monetary policy at the close of a two-day policy meeting on Thursday. The greenback also hit a 3-1/2-month high versus the Canadian dollar at C$1.1428 after a report showed a slump in Canada factory shipments in September. Investors are now looking to the release of minutes this afternoon of the Fed's last policy meeting on Oct 24-25. Although the Fed has left the benchmark overnight federal funds rate steady at 5.25 percent since June, central bank officials in recent remarks have continued to mention lingering inflation risks. Analysts said any sign of hawkishness in the minutes could provide an additional dollar boost and reignite rate hike speculation.