Dollar edges up as Fed statement looms

By Dion Rabouin

NEW YORK (Reuters) - The dollar rose slightly Wednesday against a basket of currencies as weak U.S. data and a wait-and-see approach to the Federal Reserve's Wednesday policy announcement buoyed the greenback.

The dollar stayed stronger against the euro, British pound and Swiss franc as traders brushed off two disappointing U.S. reports that included a 1.2 percent drop in durable goods for September and a surprise drop in consumer confidence in October.

"I wouldn't think that (the data released Tuesday) has too much of an influence on the Fed meeting this week. They’re looking at overall trends," said Eric Viloria, currency strategist at Wells Fargo Securities in New York. "More importantly, we're going to be paying close attention to the statement to see if there's any change in their assessment of the economy."

In late trading, the dollar index <.DXY> was up 0.08 percent at 96.948, rebounding from an earlier low of 96.583.

U.S. labor markets and economic activity as well as China's rate cut and signals from the European Central Bank were weighing on trader's minds, Viloria added.

"If the Fed notes global development as they've noted in recent meetings this could also cause some restraint in the U.S. dollar and in expectations of that tightening," he said.

There is broad consensus the Federal Open Market Committee will refrain from ending its near-zero interest rate policy after its two-day meeting concludes on Wednesday. The U.S. central bank's policy-setting group may still hint at the possibility of a rate hike at its December meeting.

U.S. interest rates futures implied traders see a 5 percent chance of the Fed raising rates and a 30 percent probability of such a move in December, according to CME Group's FedWatch program.

The FOMC will release its policy statement at 2 p.m. on Wednesday.

Globally, oil-linked currencies suffered as oil prices fell for a third straight day on fears that an oversupply would bog down crude prices and hurt oil exporters such as Norway and Russia.

The Norwegian crown lost 1.65 percent at 8.4623 crown per dollar, and the Russian currency fell more than 3 percent to 64.9475 rouble to the dollar.

Fellow oil producer Canada's currency also weakened, though not as much. The Canadian dollar reached C$1.3270 to the U.S. dollar, its weakest since early October.

Brent crude shed 1.45 percent to $46.85 per barrel, after falling more than $1 to $46.41, the lowest since mid-September.

(Additional reporting by Richard Leong, Jemima Kelly in London, Lisa Twaronite in Tokyo; Editing by Larry King and Dan Grebler)

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