The dollar hovered close to a two week high on Wednesday ahead of an expected U.S. Federal Reserve interest rate rise later in the day.
The U.S. dollar index, which measures the currency against six major peers, edged 0.17% lower to 101.14, but was close to a two week high touched on Tuesday.
Money market traders see a quarter point hike from the Federal Reserve later on Wednesday as a near certainty, but are fairly equally split on the odds for another later in the year.
Continued signs of a resilient U.S. economy in the face of the Federal Open Market Committee’s (FOMC) steep series of interest rate increases has helped lift the dollar index from a 15-month trough of 99.549 reached a week ago.
In the latest data, U.S. consumer confidence rose to a two-year high in July amid a persistently tight labour market and receding inflation.
“Given the deceleration in underlying inflation, we think the risk is (Fed Chair Jerome) Powell cools on another hike by describing the FOMC as ‘data dependent,'” which would pressure the dollar, said Joseph Capurso, a strategist at Commonwealth Bank of Australia.
