Investing.com - The dollar moved higher against the other major currencies on Monday as investors turned their attention to this week’s Federal Reserve meeting, while China’s yuan continued to weaken as the country’s central bank changed the way it manages the value of the currency.
The euro weakened, with EUR/USD down 0.35% to 1.0955 and the yen was also lower, with USD/JPY up 0.18% to 121.19.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.34% to 97.94.
Currencies looked likely to remain rangebound ahead of Wednesday’s keenly anticipated interest rate announcement by the Fed.
Most investors expect the U.S. central bank to raise interest rates for the first time since June 2006 at its upcoming meeting. Higher interest rates would make the dollar more attractive to yield-seeking investors.
With a rate hike priced in investors are now focusing on how quickly the Fed will tighten monetary policy in 2016.
The dollar was also higher against the pound and the Swiss franc, with GBP/USD slipping 0.43% to 1.5150 and USD/CHF advancing 0.27% to 0.9855.
China’s yuan opened at fresh four-and-a-half year lows on Monday after the People’s Bank of China set its yuan midpoint rate at the lowest level since 2011.
The move came after the PBOC indicated Friday that it may ease its loose peg to the dollar and allow the yuan track a broad basket of currencies of China’s trading partners.
Such a move would reduce China’s demand for dollars.