Dollar Hangs On to Recent Gains Ahead of Federal Reserve Decision

The US dollar has maintained its recent gains ahead of the Federal Reserve's decision on interest rates. Traders expect the Fed to raise rates for the first time, which would boost the dollar further.

A currency strategist at the Commonwealth Bank of Australia said a 25-basis-point increase is about 90% priced in, implying the dollar will receive a modest boost if the Fed increases. However, there's a small chance the dollar could ease if the Fed hikes but Chair Kevin Warsh downplays the risk of follow-up hikes.

The euro and sterling have not moved much despite rising global bond yields, as sovereign bonds have moved in tandem and not shifted relative differences between countries' yields very far. The Aussie dollar has steadied at $0.7129.