Investing.com - The dollar gained further against the yen on Tuesday with some expectations outgoing Fed chief Janet Yellen may be a bit more hawkish in inflation views in her final FOMC meeting when addressing the press on Wednesday.
The dollar held steady against the yen in Asia on Tuesday with the start of a two-day Fed meeting ahead and after regional data came in mixed from Tokyo.
Japan reported household spending down 2.5% on month, more that the 0.6% decline seen on month and down 0.1% annually, compared to an increase of 1.6% expected on year for December. As well, the unemployment rate ticked up to 2.8% from a steady 3.7% seen and retail sales rose 3.6%, compared to a gain of 1.8% expected on year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.16% to 89.32.
Overnight, the dollar rose against a basket of major currencies buoyed by rising bond yields amid comments from Goldman Sachs (NYSE:GS) suggesting that the Federal Reserve is poised to adopt more hawkish stance on monetary policy at its meeting this week.
Goldman Sachs said it expects the Federal Reserve bank to adopt a slightly hawkish slant in its commentary related to economic conditions and inflation, when the central bank releases its policy statement due Wednesday.
That stoked investor expectations for a more hawkish outlook on US rates, sending yields soaring while boosting the greenback. Markets have priced in three rate hikes this year, the first of which is widely expected in March.
Also supporting the greenback were mostly bullish economic data as the benefit of tax reform – which has triggered a host of companies to issue employee wage hikes and bonuses – was believed to have boosted personal income, spurring a rise in spending.
The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4% in December after an upwardly revised 0.8% rise in the previous month.
Personal income rose 0.4% in December after rising 0.3% in the previous month, while the savings rates hit a 10-year low, prompting some analysts to warn that a rebound in savings would weigh on consumer spending in the first quarter of 2018.
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