The dollar rose to seven-week peaks on Thursday as another round of solid economic data further pared back bets on easing by the Federal Reserve, with the greenback also boosted by expectations of a U.S. debt ceiling deal to avert potential default.

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The dollar index, a measure of the greenback's value against six major currencies, touched a new seven-week high of 103.63, and was last up 0.7% at 103.56 .

Against the yen, the dollar rose to a six-month peak of 138.74 and was last up 0.7% at 138.715 yen .

Negotiators for the White House and congressional Republicans met again on Capitol Hill to discuss their search for common ground on lifting the $31.4 trillion debt ceiling, and plan to meet again on Friday, a White House official said.

Top U.S. congressional Republican Kevin McCarthy also said on Thursday he expected a bill to raise the government's $31.4 trillion debt ceiling on the House floor next week, according to news reports. He noted that negotiations are at a better place than last week.

"It's pretty clear that some people were shorting the dollar as a hedge in anticipation of a crisis, but now with all the signals that we will find a resolution in the next few days, people are unwinding these positions so the dollar is strengthening," said Thierry Wizman, global FX and rates strategist at Macquarie in New York.

Apart from debt ceiling negotiations, investors also looked at U.S. economic data, which in recent weeks have reflected strength.

Thursday's reports showed lower-than-expected U.S. initial jobless claims of 242,000 in the latest week, compared with forecasts of 254,000.

Another piece of data indicated a milder-than-expected fall in the Philadelphia Federal Reserve's manufacturing index to -10.4 in May from -31.3 in April. Markets were forecasting a contraction of -19.8.

"A raft of stronger-than-expected data is intersecting with a hawkish shift in communications from Fed officials to push rate expectations across the front end of the curve," said Karl Schamotta, chief market strategist, at Corpay in Toronto.

"Traders are building up tail risk protection on a hike at the June meeting, and trimming bets on rate cuts through the latter half of the year as the Fed's long-standing 'higher-for-longer' mantra gains new resonance."

The market has priced in a roughly 33% chance that the Fed raises the benchmark interest rate at its June meeting by 25 basis points. Around a month ago, markets were pricing in around a 20% chance of a cut.

Fed officials on Thursday pushed against a rate-hike pause next month, citing persistently high inflation.

Dallas Fed President Lorie Logan on Thursday, for instance, said she is concerned that "much too high" inflation is not cooling fast enough to allow the Fed to pause its interest-rate hike campaign in June.

Elsewhere, the Chinese yuan fell to a six-month low against the dollar, which surged to 7.0608 in the offshore market. The dollar was last up 0.6% at 7.052 yuan.

"For the last several weeks, we are seeing poor data from China," said Macquarie's Wizman. "Until China can show that its recovery is on track and it can really grow in excess of 5%, it maybe tough for the dollar to get to weaken again and may be the only way it can is for China to announce some stimulus measures."