Investing.com - The dollar rose against a basket of the other major currencies on Tuesday boosted by expectations for a possible interest rate increase by the Federal Reserve next month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.51% at 101.43 at 11.04 ET, not far from the day’s high of 101.61.
Cleveland Fed President Loretta Mester said late on Monday she would be “comfortable” raising interest rates at this point as inflation pressures pick up.
But Minneapolis Fed head Neel Kashkari on Tuesday said the U.S. labor market has "more room to run," indicating that he does not believe the central bank should raise rates quickly.
The comments came as investors were turning their attention to the minutes from the Fed’s January meeting, due to be released on Wednesday, for fresh signals on the expected pace of rate hikes.
Last week Fed Chair Janet Yellen said a rate increase would be appropriate at one of the Fed’s forthcoming meetings.
The Fed has indicated that it could hike rates three times this year.
According to Investing.com's Fed Rate Monitor Tool 22% of traders expect the Fed to raise interest rates at its next meeting in March. The chance of a June increase is seen at slightly below 50%.
The dollar climbed against the yen, with USD/JPY rising 0.50% to 113.65, re-approaching the two-week highs of 114.95 set last Wednesday.
The euro remained on the defensive, with EUR/USD down 0.73% at 1.0536 amid fears over the possibility of a Brexit or Trump-style shock result in France’s upcoming presidential election.
An opinion poll on Monday showed that far right politician Marine Le Pen is likely to get the highest score in the first round of voting in April, but then lose to a mainstream candidate in the final runoff in May.
The euro shrugged off data showing that euro area private sector growth accelerated in February, boosted by a pick-up in France and Germany.
The euro was weaker against the yen and the pound, with EUR/JPY sliding 0.23% to 119.74 and EUR/GBP down 0.81% at 0.8450.
Meanwhile, sterling was little changed against the dollar, with GBP/USD at 1.2469.