The dollar took a breather on Wednesday as investors waited to see if the U.S. Federal Reserve will signal any acceleration in the pace of future rate increases to deal with an expected ramp-up in fiscal spending under President-elect Donald Trump.
In its policy meeting ending later in the day, the Federal Open Market Committee (FOMC) is seen as all but certain to raise its interest rate target by 0.25 percentage point to 0.50-0.75 percent. The decision will be announced at 1900 GMT.
It would be just the Fed's second rate hike since the financial crisis in 2007-08, following last December's tightening.
"The markets think a rate hike is a certainty so the focus is on the outlook for next year. I think they will maintain their previous projections to raise rates twice next year but if they turn more hawkish, the dollar will test its upside again," said Shinichiro Kadota, chief FX strategist at Barclays.
The dollar index, which tracks the U.S. unit against a basket of six major currencies .DXY =USD, edged down to 101.00, having slipped from this week's high of 101.78 touched early on Monday.
The euro EUR= inched higher to $1.0637, pulling further away from Monday's one-week low of $1.0525.
Against the yen, the dollar JPY= was slightly higher at 115.25 yen, but remained well below Monday's 10-month peak of 116.12 yen.
China's property investment is likely to slow in 2017 and fixed-asset investment growth could come under pressure, Xinhua news agency quoted Ma Jun, chief economist of the central bank, as saying.
China's foreign trade is likely to rebound next year, while domestic consumption may be stable, Ma was quoted as saying.
Ma also expected China's proactive fiscal policy to continue next year, Xinhua said.
Confidence in Asia toward business conditions over the coming six months dropped in the final quarter of 2016 to its lowest level in a year as firms fretted about sluggish demand in a persistently low-growth economic environment, a Thomson Reuters/INSEAD survey found.
The Thomson Reuters/INSEAD Asian Business Sentiment Index, representing the half-year outlook of 118firms, fell to 63 from 68 in the September quarter, although it remained above the 50 mark separating optimism from pessimism.
China central bank advisers rally behind beleaguered yuan as Trump threat looms In what appeared to be an effort to shore up investor confidence in the beleaguered Chinese yuan, a phalanx of central bank advisers signalled their readiness to defend the currency and said a stabilising economy will temper future depreciation pressure.
The fears about a rush of capital from the world's second-biggest economy has been fed by Republican Donald Trump's upset Nov. 8 election victory. The New York billionaire's campaign threats to slap high import tariffs on Chinese goods and label Beijing a currency manipulator on the first day in office on Jan. 20 have stoked uncertainty about the yuan's outlook.
The yuan has already lost more than six percent to the dollar so far this year, pressured by a broad rally in the dollar on the back of bets that Trump's policies will set U.S. growth on a higher gear, and prompt the Federal Reserve to raise rates at a faster pace.
Oil prices fell on Wednesday following a reported rise in U.S. crude inventories and an estimate that OPEC may have produced more crude in November than previously thought, potentially undermining a planned output cut.
U.S. West Texas Intermediate (WTI) crude oil futures were down 69 cents, or 1.3 percent, to $52.29 a barrel at 0809 GMT.
International Brent crude futures were down 60 cents, or 1.08 percent, at $55.12 per barrel.
Reference: Reuters
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