Investing.com - The dollar inched higher against a basket of other major currencies on in cautious trade on Tuesday, as investors awaited Wednesday’s conclusion of the Federal Reserve’s latest meeting and eyed the ongoing conflict in Iraq.
USD/JPY edged up 0.14% to 101.98, from 101.82 late Monday.
Investors remained wary ahead of the outcome of the upcoming Fed policy meeting on Wednesday, as they awaited fresh indications on the timing of possible interest rate increases.
The International Monetary Fund cut its forecast for U.S. economic growth this year on Monday, saying that the unusually harsh winter, along with the “still-struggling housing market” would act as a drag on growth.
However, U.S. data released on Monday indicated that the economy is continuing to improve.
Manufacturing activity in New York state expanded more quickly than forecast in June, while a separate report showed that industrial production rose more-than-expected in May.
Concerns over the ongoing Sunni insurgency in Iraq also continued to weigh on market sentiment, amid fears over the impact of higher oil prices on global economic growth.
EUR/USD was little changed at 1.3569, holding above the four month trough of 1.3502 struck earlier this month.
Earlier Tuesday, a report showed that German economic sentiment deteriorated unexpectedly in June, reflecting the recent slowdown in the German economy after a strong start to the year.
The ZEW index of economic sentiment came in at 29.8 this month, down from 33.1 in May. It was the lowest reading since December 2012.
Elsewhere, GBP/USD dipped 0.02% to 1.6980, not far from the five year peak of 1.7011 set on Monday. The pair briefly touched session lows of 1.6938 after official data showed that the annual rate of inflation in the U.K. fell to the lowest level in four-and-a-half years in May.
The annual rate of U.K. inflation slowed to 1.5% last month, down from 1.8% in April. The data did little to dampen expectations that the Bank of England will raise interest rates sooner than expected.
The dollar pushed higher against the Swiss franc, with USD/CHF easing up 0.12% to 0.8981.
The Australian dollar was weaker, with AUD/USD down 0.38% to 0.9364 after the minutes of the Reserve Bank’s June meeting indicated that rates are likely to remain on hold for some time in order to support economic growth.
Meanwhile, NZD/USD edged down 0.08% to 0.8668 and USD/CAD rose 0.16% to 1.0861.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.06% to 80.59.