Dollar broadly higher ahead of Fed meeting

NEW YORK: The dollar rose broadly on Tuesday, hitting a one-week high against the yen, as investors awaited clues from the Federal Reserve on its outlook for the US economy and how many interest rate increases it may embark on in 2018.

The futures market implied traders widely expected Fed policymakers would raise key borrowing costs by a quarter point to a target range of 1.50 percent to 1.75 percent at a two-day meeting, which will begin later on Tuesday.

Investors will watch for new quarterly forecasts from Fed officials due at 2 p.m. (1800 GMT) on Wednesday, followed by a press conference from Jerome Powell, his first as Fed chief.

"The dollar remains in wait-and-see mode ahead of tomorrow's FOMC meeting, with everyone awaiting the reveal of the dot plot and the tone of the presser," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

An index tracking the greenback versus a basket of six currencies rose 0.488 points, or 0.54 percent, to 90.253. It was within striking distance of a nearly two-week peak of 90.378 hit on Friday.

The dollar rebounded from Monday's losses against the yen following comments from Masayoshi Amamiya, one of the two new deputy governors at the Bank of Japan.

Amamiya told reporters earlier on Tuesday there is a need to stick with an easy monetary policy to support the economy.

The greenback was last up 0.31 percent at 106.41 yen after touching a nearly one-week peak at 106.60 yen.

The euro retreated on a sharp drop in confidence among German investors in March according to a ZEW research institute survey.

On Monday, the single currency had strengthened on a Reuters report that European Central Bank officials were shifting their debate from bond purchases to the expected path of interest rates, reviving bets that the ECB may raise rates sooner than previously thought.

The euro was last down 0.49 percent at $1.2273.

Sterling eased as weaker-than-forecast British inflation figures supported the view the Bank of England will likely leave rates unchanged for the foreseeable future.

The pound was last down 0.21 percent at $1.3995. It had risen to its highest level versus the greenback in more than a month on Monday as Britain and the European Union appeared to reach a broad agreement on a post-Brexit transition period and the Irish border.