Dollar Holds Advance on Fed Hike Bets

The dollar index held its recent advance to above 105 on Tuesday, supported by renewed concerns that the Federal Reserve will keep on raising interest rates following better-than-expected US services activity data.

The November ISM Services data, along with the solid November jobs report released last week, pointed to a resilient economy and bolstered the case for further monetary tightening.

Still, the market is expecting the Fed to deliver a more moderate 50 basis point rate hike at its December meeting following four straight 75 basis point increases, though questions on how long the central bank will need to tighten remain.

The dollar held recent gains against the euro, sterling and yen, while facing renewed pressure from the antipodean currencies as the Reserve Bank of Australia raised interest rates further.