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Dollar remains broadly supported, Fed meeting on tap

Published 09/16/2014, 06:07 AM
Updated 09/16/2014, 06:07 AM
Dollar remains near 14-month highs vs. rivals ahead of Fed

Dollar remains near 14-month highs vs. rivals ahead of Fed

Investing.com - The dollar remained broadly supported near 14-month highs against the other major currencies on Tuesday, as investors eyed the outcome of the Federal Reserve's two-day policy meeting on Wednesday.

Demand for the dollar continued to be underpinned by expectations for an early hike in U.S. interest rates.

The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting on Wednesday, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.

USD/JPY held steady, just below six-year highs at 107.11 as the diverging monetary policy stance between the Fed and the Japanese central bank continued to pressure the yen lower.

The yen came under pressure last week after Bank of Japan Governor Haruhiko Kuroda said that the bank would be prepared to immediately loosen monetary policy or implement other measures if its 2% inflation target becomes difficult to meet.

The euro edged up against the dollar, but still remained within close distance of a 14-month low with EUR/USD adding 0.10% to 1.2954.

The euro shrugged off data showing that the ZEW index of German economic sentiment fell to a 21-month low of 6.9 this month, down from 8.6 in August.

GBP/USD slid 0.31% to 1.6181, as investors eyed the upcoming referendum on Scottish independence, scheduled on Thursday.

Earlier Tuesday, official data showed that U.K. consumer price inflation rose 0.4% in August, in line with market expectations. On a year-on-year basis, U.K. CPI slowed to 1.5% last month from 1.6% in July.

The report also showed that the house prices index climbed 11.7% in July, compared to forecasts for a reading of 10.6% and following a 10.2% increase in June.

USD/CHF slipped 0.16% but remained close to a one-year high at 0.9337.

AUD/USD fell 0.21% to 0.9009. In the minutes of its September policy meeting, the Reserve Bank of Australia reiterated its decision to keep interest rates on hold for an extended period of time and added that the exchange rate remains "above most estimates of its fundamental value."

Meanwhile, NZD/USD shed 0.28% to 0.8153 and USD/CAD dipped 0.01% to 1.1055.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, held steady at 84.35, not far from last week's 14-month peak of 84.65.

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