The dollar rose to six-month highs against a basket of other major currencies on Wednesday ahead of a preliminary report on U.S. second quarter growth and the outcome of the Federal Reserve’s latest policy meeting later in the day.
The U.S. was to release the preliminary estimate on second quarter gross domestic product growth later Wednesday, which was to be followed by the conclusion of the Fed’s latest policy meeting later in the day.
Investors were also awaiting the U.S. nonfarm payrolls report for July on Friday.
The dollar has strengthened since Fed Chair Janet Yellen said earlier this month that interest rates could rise sooner if the recovery in the labor market continued.
The greenback received an additional boost in recent sessions as economic data indicated that the recovery is gaining traction. A report by the Commerce Board on Tuesday showed that U.S. consumer confidence rose to the highest level in seven years this month.
The euro was wallowing at eight month lows, with EUR/USD trading at 1.3401.
The euro remained under heavy selling pressure amid concerns over the divergence in monetary policy between the European Central Bank and its major peers.
Data on Wednesday showed that Spain’s economy grew by a stronger than forecast 0.6% in the second quarter of 2014, and expanded 1.2% on a year-over-year basis.
But a separate report showed that consumer inflation in Spain fell 0.6% in July, underling concerns over the threat of deflationary pressures in the euro area.
The euro zone was to release what would be closely watched data on consumer prices on Thursday.
USD/JPY was up 0.13% to 102.24, the highest since June 18, while USD/CHF touched six month highs of 0.9074.
Sterling edged down to one-and-a-half month lows, with GBP/USD dipping 0.05% to 1.6934.
The New Zealand dollar was also close to one-and-a-half month lows, with NZD/USD at 0.8507. The Australian and Canadian dollars were also weaker, with AUD/USD slipping 0.21% to 0.9363 and USD/CAD rising 0.15% to 1.0869.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.10% to 81.39, the most since early February.