The dollar was little changed against a basket of currencies on Wednesday, hovering at a one-month peak as it consolidated gains from earlier this week on expectations of a possibly another Federal Reserve interest rate increase later this year.
Sterling rose after a Bank of England’s chief economist Andy Haldane said he expected to back a rate increase this year. The currency sagged on Tuesday after BoE Governor Mark Carney said now was not the time to raise UK interest rates after three policymakers had voted in favour of a hike last week.[GBP/]
Commodity-linked currencies such as the Canadian dollar and Norwegian crown fell in step with lower oil prices.
“The dollar will bump along just like this and perhaps strengthens a bit if we see tax reform from Washington,” said Kristina Hooper, global market strategist at Invesco in New York.
Top Republicans from the U.S. Congress and Trump administration vowed on Tuesday to complete tax reform by the end of 2017.
The greenback rose earlier this week in reaction to comments from New York Fed President William Dudley who said a tightening U.S. labour market would rekindle inflation, which would leave open the possibility of another rate hike by year-end after two increases so far this year.
The dollar index was down 0.07 percent at 97.695, slightly below a one-month high of 97.871 reached on Tuesday.
The greenback weakened most on the day against the pound following Haldane’s hawkish view, which ran counter to his perceived dovish reputation.
“If his opinion is shifting then that is potentially significant news for rates going forward,” said Adam Cole, head of FX strategy at RBC Capital Markets in London.