SINGAPORE: The dollar held firm near two-week highs versus a basket of major currencies on Tuesday, with traders awaiting the U.S. Federal Reserve´s policy meeting this week for fresh catalysts.
The dollar index, which tracks the greenback against a basket of six major peers, inched up 0.1 percent to 93.931. That was within sight of Friday´s peak of 94.087, the highest since Nov. 21.The Fed is widely expected to raise interest rates at its two-day policy meeting that will end on Wednesday and is expected to tighten policy further next year. Most economists polled by Reuters now expect three more rate rises next year compared with two when surveyed just weeks ago, although the outlook remains clouded by stubbornly subdued inflation.
Since a rate hike this week has been priced in, the dollar could sag initially after the Fed´s policy announcement, said Steven Dooley, currency strategist for Western Union Business Solutions in Melbourne. The Fed, however, will probably sound optimistic about the economic outlook and that is likely to help underpin the greenback, he added.
"Once the initial flurry of short-term volatility rides out, we´re likely to see the U.S. dollar stronger again," Dooley said, describing how the dollar could react to the Fed´s policy announcement due on Wednesday.
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