Investing.com - The U.S. dollar inched higher against the other major currencies amid low-volume holiday trading on Wednesday, with markets focused on the possibility of further U.S. interest rate hikes next year.
Trading is expected to remain thin this week ahead of the New Year holiday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.1% at 103.12 by 3:50AM ET (08:50GMT), not far from last week's 14-year peak of 103.62.
Against the yen, the dollar was up 0.2% at 117.63, crawling back towards a 10-1/2 month high of 118.65 set last week.
Meanwhile, the euro dipped 0.1% to against the greenback to 1.0445, not far from last week's 13-year low of 1.0352.
Elsewhere, the British pound dipped 0.1% to 1.2255 against the dollar, within sight of a seven-week low of 1.2229 touched late last week, amid renewed uncertainty over the process by which Britain will leave the European Union.
The greenback remained well-supported after previous day's data showed U.S. consumer confidence hitting its highest level in more than 15 years in December, in addition to robust housing numbers.
The data helped underscore expectations that the Federal Reserve would raise interest rates at a faster pace next year.
Since the U.S. election in early November, the dollar has rallied by almost 6% thanks to bets of higher U.S. growth and a faster pace of interest rate increases under incoming president Donald Trump.
The Fed hiked interest rates for the first time in a year earlier this month and projected three more increases in 2017. In contrast, central banks in Europe and Japan remain committed to very loose monetary policies
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.
The National Association of Realtors is to release data on November pending home sales at 10:00AM ET (15:00GMT) on Wednesday. The report is expected to show pending home sales rose 0.5% last month, after inching up 0.1% in October.