Dollar near its highest level this year after economic data, Yen down

US dollar rose close to its highest level since November on Wednesday ahead of the Federal Reserve’s interest rate decision later on Wednesday, after data on Tuesday showed more signs of continued inflationary pressures on the US economy.

According to Reuters, the yen fell to its lowest level since doubts arose about possible intervention by Japanese authorities on Monday, as traders tested the extent of the Ministry of Finance’s determination to intervene.

The dollar index, which measures the currency’s performance against a basket of six major currencies, rose 0.066% to 106.370 after earlier approaching the 106.51 level, which would be the highest since November 1.

Trading volumes around the world declined somewhat due to the Labor Day holiday.

The euro fell marginally to $1.0623, after falling 0.52% the previous day when US data pushed the dollar higher.

Data on Tuesday showed that the growth in US labor costs accelerated in the first quarter of the year, as the labor cost index increased 1.2%, more than the 1% that economists had expected.

A series of stronger-than-expected data caused investors to curb their expectations for the US Central Bank to cut interest rates this year. Traders on Wednesday expected cuts of only 29 basis points by December, down from expectations at the beginning of the year for a cut of more than 170 basis points.

The Federal Reserve is expected to keep interest rates at 5.25 percent to 5.5 percent unchanged, and is scheduled to announce its decision at 2 p.m. EST (1800 GMT) on Wednesday, but the focus will be on Chairman Jerome Powell’s comments on the data issued recently.