Dollar Holds Firm Ahead of Fed Rate Hike Decision

The dollar is holding its ground near multi-week highs against several major currencies ahead of a key Federal Reserve decision. The Fed's decision to hike interest rates, likely by 25 basis points, is seen as all but certain, with a 90% probability according to Carol Kong, currency strategist at the Commonwealth Bank of Australia.

This expected rate hike has given the dollar a boost, pushing it further against the yen and New Zealand dollar. The kiwi fell to a two-month low of $0.5749 in Asia morning trade, while the yen hit a one-week low of 155.43 per dollar.

However, some analysts are cautioning that even if the Fed does hike rates, it may not be enough to restore credibility with markets, and a single or even two hikes may not be sufficient to achieve this goal.