FOREX: Dollar gains ahead of US Federal Reserve policy signal

SINGAPORE - The US dollar held at a two-week high on Wednesday ahead of policy decisions from central banks, with the Federal Reserve widely expected to leave its policy interest rate unchanged while signalling the probability of any December move.

Most of its peers were unmoved ahead of the Fed decision. The euro EUR= was flat at $1.1129 as was the British pound GBP= at $1.3307. Against the yen JPY=, the dollar oscillated between gain and loss and was last 0.1% weaker at 157.81 yen.

The kiwi dollar NZD= was trading level at $0.5682 ahead of a policy decision from the Reserve Bank of New Zealand, with economists generally expecting an interest rate hike.

Its Australian counterpart AUD= was 0.3% stronger at $0.7047 after the release of inflation data which was 1.3% in the third quarter of the year, after 0.6% the previous quarter. The trimmed mean measure of core inflation was 1%, matching market estimates and keeping the annualised rate at an above-target 3.6%.

The Reserve Bank of Australia will debate whether four interest rate hikes this year will prove sufficient to return inflation to target at a policy meeting next week, Governor Michele Bullock told lawmakers on Wednesday.

In the US, traders broadly expect no change in central bank policy. Fed funds futures are pricing an implied 91% probability the Federal Open Market Committee will keep its policy interest rate on hold, the CME Group's FedWatch tool showed.

"The Fed doesn't need to hike today to move markets," said Chris Weston, head of research at Pepperstone Group in Melbourne. "It simply needs to change the perceived probability of hiking in December."

The US dollar index =USD, which measures the greenback's strength against six currencies, rose 0.3% on Tuesday to 102.40, its highest since October 14. The yield on the US 10-year Treasury bond US10YT=RR was unchanged at 4.9967%.

In cryptocurrencies, bitcoin BTC= was flat at $80,736.07, while ether ETH= nudged up 0.1% to $2,345.25.

-Gregor Stuart Hunter; Editing by Jacqueline Wong and Christopher Cushing/Reuters