Dollar holds gains ahead of Fed policy signal, RBNZ decision

The dollar maintained a steady position at a two-week high at the beginning of trade on Wednesday, as most of its counterparts remained unaffected ahead of a series of policy announcements from central banks, with the Federal Reserve expected to leave interest rates unchanged. Most of the greenback's peers were unmoved prior to the Fed's decision.

The euro held steady at US$1.1129, the British pound at US$1.3307, and the Japanese yen saw a 0.1% increase, trading at 158.03 yen. The New Zealand dollar, targeted to receive the Reserve Bank of New Zealand (RBNZ) decision, traded flat at US$0.5682, while the Australian dollar was 0.1% stronger at US$0.7031, ahead of release of September's CPI data.

Traders broadly anticipate no changes in policy from the US central bank, with Fed funds futures indicating a 91% probability that the Federal Open Market Committee will maintain interest rates. Chris Weston, head of research at Pepperstone Group Ltd in Melbourne, noted that the Fed does not necessarily need to raise rates at the time to move markets; it simply requires a shift in the perceived probability of a December hike.

The dollar index, which gauges the greenback's strength against a basket of six currencies, increased by 0.3% to 102.40 on Tuesday, reaching its highest level since October 14. The yield on the US 10-year Treasury bond remained unchanged at 4.9967%. In the cryptocurrency market, Bitcoin remained flat at US$80,736.07, and Ether experienced a slight 0.1% increase to US$2,345.25.