Investing.com - The dollar edged higher against other major currencies on Tuesday, as investors eyed the Federal Reserve's policy meeting this week amid growing expectations for a rate hike, although fresh political tensions limited gains.
The dollar came under pressure after President Donald Trump's former campaign manager Paul Manafort was charged with money laundering by federal investigators.
Special Counsel Robert Mueller has also been investigating whether Trump obstructed justice in his firing of FBI Director James Comey.
Investors fear that the charges may divert Trump’s attention from his legislative agenda, which includes tax reforms.
Investors were looking ahead to the Fed's upcoming monetary policy statement on Wednesday for fresh indications on the path of rate hikes this year and Friday’s U.S. jobs report for October.
Trump is also expected to name his pick for the next head of the U.S. central bank on Thursday. Recent reports have indicated that Trump is likely to appoint Fed Governor Jerome Powell, who is viewed as more dovish than other candidates.
USD/JPY was steady at 113.26, while USD/CHF gained 0.38% to trade at 0.9982.
The yen showed little reaction after the Bank of Japan kept monetary policy on hold on Tuesday in a widely expected move.
EUR/USD slipped 0.15% to 1.1631, while GBP/USD was little changed at 1.3209.
The single currency remained under pressure after data showed that euro zone inflation slowed last month.
However, on a more positive note, another report showed that the euro zone economy grew as expected in the third quarter.
Market participants also continued to monitor developments in Spain, following Catalonia’s declaration of independence from Madrid on Friday. The move prompted Spain’s prime minister to sack the Catalan government and call elections next month.
The Australian and New Zealand dollars were weaker, with AUD/USD down 0.25% at 0.7669 and with NZD/USD sliding 0.42% to 0.6847.
Data earlier showed that China's official manufacturing purchasing managers' index slipped to 51.6 in October from 52.4 the previous month.
China is Australia's biggest export partner and New Zealand's second biggest export partner.
Meanwhile, USD/CAD was almost unchanged at 1.2841.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.14% at 94.50 by 06:15 a.m. ET (10:15 GMT).