Investing.com - The dollar remained near 14-month highs against the other major currencies on Wednesday, as ongoing expectations for an early hike in U.S. interest rates continued to support demand for the greenback.
USD/JPY was trading close to six year highs and was last up 0.46% to 106.67.
The yen remained under pressure after data on Monday showing that Japan’s second quarter economic contraction was larger than initially estimated, and another report showing that the country’s current account surplus fell short of expectations in July.
The weak data indicated the economy is struggling to gain momentum and fuelled expectations for more stimulus from the Bank of Japan.
Meanwhile, expectations that the Federal Reserve is growing closer to raising interest rates have continued to support demand for the greenback.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting next week which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
A study by the San Francisco Federal Reserve published on Monday indicated that Fed officials see rates rising earlier than markets expect.
The euro held above 14-month lows against the dollar, with EUR/USD last down 0.16% at 1.2917.
The euro remained under pressure after the European Central Bank unexpectedly cut rates to record lows across the euro zone last week and unveiled new easing measures in a bid to shore up the faltering recovery and boost inflation.
GBP/USD edged up 0.26% to 1.6146, but gains were expected to remain limited ahead of a new opinion poll on the Scottish independence referendum due to be published later in the day.
The pound found support after Bank of England Governor Mark Carney told MP’s that the point at which interest rates will need to rise has moved closer.
Speaking in front of Parliament’s Treasury committee Carney also said the BoE has a contingency plan to support financial stability in the U.K. if Scotland votes for independence.
Uncertainty over what currency an independent Scotland would use, as well as concerns over how much of the U.K. national debt it would take on have prompted investors to exit positions in sterling.
USD/CHF climbed 0.50% to fresh one-year highs at 0.9379.
The Australian and New Zealand dollars were lower, with AUD/USD dropping 0.59% to 0.9150 and with NZD/USD slipping 0.11% to 0.8237, while USD/CAD held steady at 1.0976.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.20% to 84.43, not far from Tuesday's 14-month peak of 84.65.