The dollar index strengthened as traders awaited comments from Federal Reserve officials for further clues on central bank policy after low inflation figures raised expectations for an interest rate cut next month.

The Bloomberg Dollar Spot Index was little changed after a 0.4% decline on Tuesday. Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic are scheduled to speak later in the day. "The recent consolidation of the U.S. dollar in Asia reflects markets carefully considering incoming data and evolving policy signals," said Shier Lee Lim, head of macro strategy at Convera in Singapore. Lower-than-expected CPI has contributed to the risk-on environment.

However, recent Fed comments suggest that officials are likely to remain cautious given that services inflation remains "robust." "For now, I see the dollar consolidating until clearer signals emerge from upcoming data and central bank comments."

The yield on the two-year U.S. Treasury note stabilized after a four-basis-point decline on Monday. Ukrainian President Volodymyr Zelenskiy and the leaders of France, Germany, the UK, Italy, Poland, and Finland will hold a phone call with President Donald Trump on Wednesday. Zelenskiy said he would not cede the eastern Donbas region to Russia ahead of a planned summit between the US and Russian leaders on Friday.

USD/JPY edged up 0.1% to 148. An auction of five-year Japanese government bonds showed a weaker demand ratio than the 12-month average. This ratio is the lowest since 2020. AUD/USD was steady at 0.6530. NZD/USD edged up 0.1% to 0.5959. EUR/USD edged up less than 0.1% to 1.1686. GBP/USD was little changed at 1.3504. Want more news on this market? Click here for the First Word channel, curated with actionable news from Bloomberg and select sources. (alg)

Source: Bloomberg