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* Dollar index posts biggest one-day rally in over a month
* Aussie bulls eye labour force data at 0130 GMT
By Ian Chua
SYDNEY, April 14 (Reuters) - The dollar was broadly firmer early on Thursday, having posted its biggest one-day gain in more than a month as an improvement in global sentiment led investors to trim bearish positions.
The Federal Reserve has highlighted global uncertainty as the major bar to another hike in interest rates. So, when upbeat China trade data and a pick up in commodity prices seemed to lessen the risk of a deeper world downturn, dollar bulls figured there was now more chance of a move.
Analysts at CitiFX said recent developments might serve as "foundational encouragement" for investors to warm up to the idea of pricing in more tightening.
The dollar index rallied nearly 1 percent overnight and was last at 94.744. The greenback popped back above 109.00 yen, pulling well away from a 17-month trough of 107.63 set a few days ago.
Beating a hasty retreat, the euro skidded to $1.1273 from a six-month high of $1.1465.
Just this week, Richmond Fed President Jeffrey Lacker, San Francisco Fed President John Williams and Philadelphia Fed President Patrick Harker all suggested that several hikes were possible this year.
Fed funds futures <0#FF:> are barely pricing in one hike this year, let alone multiple tightenings after recent dovish comments from core Fed members led by Chair Janet Yellen.
In an interview with Time magazine published on Wednesday, Yellen again highlighted a cautious approach to monetary policy, saying the U.S. central bank must try to avoid making "big mistakes".
An unexpected fall in U.S. retail sales in March supported Yellen's cautious approach. The disappointing data contributed to a fall in U.S. yields, yet it failed to dent the rallying dollar.
Similarly wary, the Bank of Canada warned of weaker global growth and a less favourable U.S. outlook as it held interest rates steady. It raised growth forecasts for 2016, but nudged them lower for 2017.
The Canadian dollar stepped back to C$1.2808 per USD , from a nine-month peak of C$1.2744.
Other commodity currencies also ceded ground to the greenback. The Aussie dipped below 77 U.S. cents after coming within a whisker of its 2016 peak of $0.7723.
Traders said Australia's labour force data due at 0130 GMT could re-energise the Aussie should the numbers come in on the strong side.
For the rest of the market, the key focus will be on China's first quarter gross domestic product and March industrial output and retail sales due on Friday.
Investors will be looking for more signs of stabilisation in the world's second-largest economy, following Wednesday's upbeat trade data. (Reporting by Ian Chua; Editing by Eric Meijer)