2023.10.3121:04:00UTC+00Dollar Rises Against Major Rivals Ahead Of Fed Policy

The U.S. dollar climbed higher against its major counterparts on Tuesday, as traders looked ahead to the Federal Reserve's monetary policy.

The Fed, which is scheduled to announce its policy on Wednesday, is widely expected to hold interest rates unchanged. The central bank's accompanying statement is eyed for clues about the outlook for future rate hikes, if any.

CME Group's FedWatch Tool is currently indicating a 97.1% chance the Fed will leave rates unchanged on Wednesday and a 68.9% chance rates will remain unchanged in December.

"The Fed is still wary of letting their guard down too early after missing their inflation target badly in the last few years," said Bill Adams, Chief Economist for Comerica Bank.

On the economic front, a report from the Labor Department showed employment costs jumped by slightly more than expected in the third quarter.

The report said the employment cost index shot up by 1.1% in the third quarter compared to economist estimates for a 1% advance.

However, the report also showed the annual rate of growth by the employment cost index slowed to 4.3% in the third quarter from 4.5% in the second quarter.

The dollar index, which dropped to 105.91 in the European session, surged to 106.86 before easing a bit to 106.74, up nearly 0.6% from the previous close.

Against the Euro, the dollar firmed to 1.0577 from 1.0617. The dollar strengthened to 1.2147 against Pound Sterling. Against the Japanese currency, the dollar rallied sharply, fetching 151.69 yen a unit, up from the previous close of 149.10 yen.

The dollar moved stronger against the Aussie to 0.6338, and against Swiss franc, it strengthened to CHF 0.9102. Against the Loonie, the dollar firmed to C$1.3878 from C$1.3814.