NEW YORK: The US dollar hovered near a one-week high against a basket of major currencies on Wednesday, remaining little changed from Tuesday's levels on hesitation to make bets ahead of a widely anticipated Federal Reserve interest rate hike.
The dollar has strengthened and short-dated Treasury yields have risen in anticipation of an initial 25 basis point "liftoff" that would move the Fed's target rate from the zero lower bound to a range of between 0.25 and 0.50 percentage points.
Uncertainty over the pace of subsequent rate hikes, however, kept trading subdued. As of September, Fed officials expected perhaps four rate hikes next year, but analysts said a cut to those forecasts could hurt the dollar, while Fed members maintaining or increasing the number could strengthen the currency.
"Given the enormity of all these decisions that will dictate price action for many weeks to come, unless you have a crystal ball you'd be very foolhardy to put on any bets right now," said Richard Franulovich, senior currency strategist at Westpac in New York.
The dollar index, which measures the greenback against a basket of six major currencies, was last mostly flat at 98.229 . That level remained near a one-week high of 98.321 touched earlier in the session.
The Fed's decision will be released at 2 p.m. ET (1900 GMT). It is to be followed by a news conference by Fed Chair Janet Yellen to elaborate on the central bank's latest policy statement.
"All the focus shifts to the pace of the rate hikes going into next year," said Alfonso Esparza, senior currency Strategist at Oanda in Toronto.
The euro was last slightly lower against the dollar at $1.09280. The dollar was last up 0.18 percent against the yen at 121.870 yen, while the greenback was down 0.51 percent against the Swiss franc at 0.98630 franc.
Esparza said greater uncertainty over the Fed's path, compared with more certainty over the Swiss National Bank's (SNB) monetary policy path after a recent meeting from that central bank, was leading to greater skittishness toward the dollar and hurting the greenback against the franc.
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