Investing.com - The dollar edged higher against a basket of other major currencies on Tuesday, but gains were limited as investors remained cautious ahead of this week’s Federal Reserve meeting and amid concerns over the escalating conflict in Iraq.
USD/JPY was up 0.20% to 102.03, from 101.82 late Monday.
Concerns over the ongoing Sunni insurgency in Iraq continued to weigh on market sentiment, amid fears over the impact of higher oil prices on global economic growth.
Investors were also cautious ahead of the outcome of the upcoming Fed policy meeting on Wednesday, as they looked for fresh indications on the timing of possible interest rate increases.
The International Monetary Fund cut its forecast for U.S. economic growth this year on Monday, saying that the unusually harsh winter, along with the “still-struggling housing market” would act as a drag on growth.
However, U.S. data released on Monday indicated that the economy is continuing to improve.
Manufacturing activity in New York state expanded more quickly than forecast in June, while a separate report showed that industrial production rose more-than-expected in May.
EUR/USD slipped 0.11% to 1.3556, holding above the four month trough of 1.3502 struck earlier this month.
Elsewhere, GBP/USD was steady at 1.6981, not far from the five year peak of 1.7011 set on Monday, ahead of U.K. data on consumer prices due for release later in the session.
Demand for sterling continued to be underpinned by expectations that the Bank of England will raise interest rates sooner than its major peers.
The dollar pushed higher against the Swiss franc, with USD/CHF rising 0.18% to 0.8986.
The Australian dollar was weaker, with AUD/USD down 0.56% to 0.9346 after the minutes of the Reserve Bank’s June meeting indicated that rates are likely to remain on hold for some time in order to support economic growth.
Meanwhile, NZD/USD slid 0.14% to 0.8663 and USD/CAD edged up 0.12% to 1.0856.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.09% to 80.62.