Investing.com - The dollar slipped lower against the other major currencies on Monday, as investors turned their attention to the upcoming Federal Reserve meeting this week amid expectations that the central bank is on track to raise interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.22% at 101.38.
Little doubt now remains that the Fed will hike rates for the first time in a year at the conclusion of its meeting on Wednesday, with investors pricing in a 100% chance of an increase, according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
The Fed is also expected to announce updated economic forecasts and markets will be watching for signals the outlook for inflation and the expected pace of rate hikes in 2017.
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.
The dollar was higher against the yen, with USD/JPY up 0.39% at 115.83, after touching highs of 116.12 earlier, the most since February 8.
The yen showed little reaction to data earlier showing that Japanese core machinery orders rose in October for the first time in three months, pointing to a pickup in capital spending.
The euro pushed higher, with EUR/USD climbing 0.36% to 1.0594.
The single currency firmed up after falling since the European Central Bank extended its bond-buying stimulus program late last week, even as it cut back on the size of asset purchases.
The pound gained ground, with GBP/USD rising 0.42% to 115.83 as investors looked ahead to a raft of economic reports out of the U.K. and the Bank of England’s policy meeting later in the week.
Meanwhile, the Canadian dollar hit seven-week highs against the greenback as a rally in oil prices boosted the commodity related currency.
USD/CAD was down 0.35% at 1.3140 after falling as low as 1.3112 earlier, the weakest level since October 20.