© Reuters. Dollar trading near 4-month highs ahead of Fed meeting
Investing.com – The dollar was trading near four month highs against a currency basket on Tuesday, buoyed by upbeat U.S. economic data as investors awaited the latest policy decision and the U.S. jobs report later in the week.
The , which measures the greenback’s strength against a basket of six major currencies, was up 0.12% to 91.74 by 03:18 AM ET (07:18 AM GMT), within close reach of Friday’s highs of 91.79, the strongest level since January 11.
The index rose 2% in April after the yield on rose above the psychologically important 3% level for the first time in four years.
The dollar was boosted on Monday after the Commerce Department said for the first time in over a year in March.
Rising inflation would be a catalyst to push the Fed toward raising interest rates at a faster pace than currently expected. Fed officials projected three increases in 2018 at their meetings December and March.
The Fed is due to conclude its two-day meeting on Wednesday and is not expected to take any action on interest rates. The majority of economists believe the next move higher will come its meeting in June.
Markets are also looking ahead to Friday’s U.S. employment report for April, which could provide further signs of strength in the world’s largest economy.
The dollar edged higher against the yen, with inching up 0.12% to 109.42, holding just below Friday’s two-and-a-half month highs of 109.52.
Trade volumes remained thin with markets in much of Asia closed for holidays.
The euro was close to three-and-a-half month lows, with at 1.2063.
The single currency was pressured lower after data on Monday showing that retail sales in Germany, the euro area’s largest economy, declined for a fourth consecutive month in March.
It was the latest indication that growth in the euro zone has moderated since the start of the year, dampening expectations that the European Central Bank will soon start scaling back its stimulus program.
Sterling was not far from Monday’s two-month lows, with last at 1.3750 amid diminished expectations for a rate hike by the Bank of England this month.
Meanwhile, the Australian dollar was little changed at four-and-a-half month lows, with at 0.7526.
The Aussie showed little reaction after the left interest rates on hold overnight, in a widely anticipated decision and said that it expected inflation to remain muted.
The New Zealand dollar was last at 0.7029, its lowest level since December 26.
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