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.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.
"Given the deceleration in underlying inflation, we think the risk is 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.Elsewhere, the ECB sets policy on Thursday. Again, a quarter point hike is widely expected, but building evidence of an economic slowdown has called into question the chances of another by year-end.
The dollar was down 0.2% at 140.70 yen , following a rebound from a multi-week low of 137.245 mid-month.suggested the Reserve Bank of Australia would forgo a rate hike on Aug. 1. "Just when it looked safe to get back in the water with Aussie longs on the China sentiment rebound, the downside surprise on inflation casts fresh doubt on the extent of further RBA tightening needed," said Sean Callow, a strategist at Westpac, predicting the currency could drop below $0.67 near term.
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