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The dollar crept up on Wednesday after falling the previous day, but was unable to break out of its recent trading ranges, as investors focused on a gathering of central bankers for clues on when the US Federal Reserve will hike interest rates again.
Analysts said data on Tuesday that showed new US single-family home sales unexpectedly rose in July, reaching their highest level in nearly nine years, had helped the dollar marginally.
The main focus remained on the global central banks that will gather in the US mountain resort of Jackson Hole later this week, where Fed Chair Janet Yellen will give a speech on Friday.
Recent hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley have raised some investors’ expectations that Yellen might signal that interest rates could rise as soon as September.
“We’re so focused on what guidance we might or might not get on Friday that we're really just drifting around in these ranges at the moment without any real direction,” said RBC Capital Markets currency strategist Adam Cole.
Markets are pricing in around a 21 per cent chance of a hike in September, but a 50 per cent chance of at least one hike by the end of the year, according to CME FedWatch.
Minutes from the Fed’s July 26-27 policy meeting showed officials were divided over whether to raise rates soon, with some insisting that more solid economic data were needed before any tightening.
Against a basket of major currencies, the dollar inched up 0.1 per cent to 94.650.
It was flat at 100.28 yen after nudging below 100 yen the previous day to 99.925. The pair has been mired in a narrow 99.55-102.83 range this month amid a dearth of directional cues, with liquidity low as many market participants take summer holidays.
“My forecast for the next few months is around the current range, because investors are worried about economic uncertainties, and the U.S. election is coming soon” in November, said Harumi Taguchi, principal economist at IHS Markit in Tokyo.
The euro was down 0.1 per cent at $1.1290.
Data on Tuesday showed that surprisingly strong growth in France supported stable euro zone private business activity during August, alleviating some concerns about negative spillover from Britain's vote to leave the European Union.
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