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Currencies: Dollar advance pauses as Fed decision looms

The dollar was little changed on Wednesday amid caution ahead of the U.S. Federal Reserve’s interest-rate decision later in the day.

The prospects of U.S. President-elect Donald Trump’s fiscal stimulus and a higher yield environment have driven the dollar sharply higher since the U.S. elections in early November. Market participants aggressively factored in stronger U.S. growth and more rate increases from the Fed, including one at this week’s meeting.

Still, questions remain over how aggressively the Fed will raise rates in coming months. A stronger dollar and higher borrowing costs could cool economic activity, potentially reducing the need for the Fed to tighten monetary conditions quickly.

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