Investing.com - The dollar was holding steady against the other major currencies on Wednesday ahead of an expected interest rate cut from the Federal Reserve and data on third quarter growth that could shed light on the longer term outlook for monetary policy.
The U.S. central bank is expected to cut rates for a third time in as many meetings when it concludes its two-day meeting on Wednesday.
Advance data on third quarter growth was also expected to be scrutinized for clues on the economic outlook, coming ahead of other major data releases such as Friday's key non-farm payrolls report.
"In the last 4-5 weeks there has been a concern that the consumer part of the market is starting to slow and that could mean more cuts next year," said Derek Halpenny, European head of global markets at MUFG in London.
"So what lies ahead post the Fed meeting, the GDP data, payrolls will shape market expectations in addition to what (Fed chief Jerome) Powell will say today."
The dollar was steady against the euro at 1.1118 by 05:17 AM ET (09:17 GMT) and marginally lower versus a basket of six major currencies at 97.41.
Against the yen, the greenback was also little changed at 108.82, not far from its three-month high of 109.07 yen touched on Tuesday.
Investors are watching for any indication that further cuts are likely, with futures pricing suggesting more easing is expected in 2020. If that is not foreshadowed, traders expect the dollar to rise.
"If the market is going to price in the end of current rate-cut cycle, the dollar/yen could climb above 110 yen," said Tohru Sasaki, head of Japan markets research at JPMorgan Chase Bank.
"On the other hand, if the market is going to price in two more cuts after this month's expected cut, the pair could fall to mid-107 yen level," he added.
Optimism that Washington and Beijing would finalize the first-stage of a trade deal next month had boosted risk assets in recent days, but markets have turned wary.
A U.S. administration official said on Tuesday an interim trade agreement between the two side might not be completed in time for signing on the sidelines of an Asia-Pacific summit in Chile next month, but that does not mean the accord is falling apart.
Sterling was also stable, holding below recent five-month highs, after Britain's lower house of parliament approved calling an early election in December that might break the Brexit deadlock.
--Reuters contributed to this report