Investing.com - The greenback rose to a five month high on Wednesday, as investors look ahead to the latest meeting minutes from the Federal Reserve.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.42% to 93.90 as of 11:09 AM ET (15:09 GMT).
Investors will be looking to the Fed meeting minutes at 2:00 PM ET (18:00 GMT) closely for any signs of tightening monetary policy.
A recent increase in bond yields, along with positive economic data and rising inflation, has boosted expectations that the Federal Reserve will increase interest rates and tighten monetary policy.
The Fed raised rates in March and is expected to raise rates twice more, with some investors expecting a third hike. Expectations of higher interest rates tend to boost the dollar by making the currency more attractive to yield-seeking investors.
Meanwhile the euro and sterling continued to fall to five-month lows after disappointing economic data.
The euro was near a five-month low after private sector growth in the euro zone fell to its slowest pace in 18 months in May. The report is likely to push back expectations of an interest rate hike by the European Central Bank.The euro was down, with EUR/USD falling 0.65% to 1.1703.
Meanwhile the pound slumped after data showed that annual inflation slowed in April, which could ease pressure on the Bank of England to increase interest rates. GBP/USD dipped 0.69% to 1.3340.
The dollar was down against the safe haven yen, with USD/JPY falling 0.64% to 109.96. Elsewhere, the Australian dollar was lower, with AUD/USD down 0.46% to 0.7540 while NZD/USD decreased 0.48% to 0.6900.