Forex – Dollar Inches Higher, FOMC Eyed

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© Reuters.  © Reuters.

Investing.com – The dollar traded higher against a basket of major currencies as better-than-expected data lifted expectations of bullish U.S. economic growth ahead of the Federal Reserve’s upcoming decision on interest rates due Wednesday.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.20% to 94.64.

Private U.S. employers added 235,000 jobs in October, according to a report released Wednesday by ADP and Moody’s Analytics. That beat economists’ forecast of 200,000.

The Institute for Supply Management’s index posted a reading of 58.7 in October, missing expectations for a reading of 60.

The duo of reports came just hours ahead of the release of the Federal Open Market Committee’s policy statement, widely expected to show Fed members voted to leaves rates unchanged.

Analysts, however, are expected to carefully parse the statement to gauge sentiment on inflation, which continues to run below the fed’s target rate of 2%.

The uptick in the dollar weighed on sterling but losses were capped amid data pointing to a rebound in UK manufacturing growth while expectations that the Bank of England will increase interest rates on Thursday lifted sentiment.

GBP/USD fell 0.12% to $1.3266.

EUR/USD lost 0.17% to $1.1625, while EUR/GBP fell 0.06% to £0.8763.

USD/JPY rose 0.32% to Y114.01 as the yen came under pressure after the Bank of Japan earlier this week left its massive stimulus programme unchanged.

USD/CAD traded roughly flat at C$1.2879. Sentiment on the loonie has turned negative recently as data showed signs of weakness in the Canadian economy after economic growth unexpectedly fell in August.

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