- Dollar index pulls away from 6-1/2-month lows
- Rise in U.S. Treasury yields supports the dollar
- Focus shifts from U.S. politics to Fed policy for time being
- Fed's meeting meets due later in session awaited for cues
The dollar held firm early on Wednesday, having rebounded from 6-1/2-month lows against its major peers thanks to a rise in U.S. Treasury yields, with investor focus now turning towards the Federal Reserve's monetary policy stance.
The dollar index against a basket of six currencies was steady at 97.336 .DXY after bouncing 0.4 percent the previous day.
It managed to pull away from the 96.797 level plumbed on Monday, its lowest since Nov. 9, when concerns over U.S. politics stemming from the Trump election campaign's suspected links with Russia took a toll on the greenback.
The dollar was boosted as U.S. debt prices fell, with the benchmark 10-year Treasury note yield US10YT=RR climbing 3 basis points overnight and putting some distance between the one-month trough reached last week in a bond-buying flight to safety.
"The rise in Treasury yields is supporting the dollar. It appears that speculative buying of Treasuries has run its course, with Trump concerns and geopolitical risks no longer fresh news," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
The dollar was up 0.15 percent at 111.945 yen JPY= , its highest in a week.
The U.S. currency also managed to halt its slide against the euro, which had enjoyed a bull run this month on factors including an ebb in French political concerns, upbeat euro zone data, and a widening German-U.S. government debt yield spread.
The euro was little changed at $1.1179 EUR= , nudged away from a 6-1/2-month high of $1.1268 scaled the previous day.
Immediate market focus was on the minutes of the Fed's latest policy-setting meeting, set for publication at 2 p.m. eastern time (1800 GMT) on Wednesday.
The market already expects the Fed to hike interest rates in June, but given the greenback's recent weakness, dollar bulls are expected to welcome any hawkish hints by the central bank.
Elsewhere, the Canadian dollar stood steady at C$1.3522 CAD=D4 per dollar after touching C$1.3457 overnight, its strongest in a month.
A rise in crude oil prices lifted the Canadian dollar. The focus is now on the OPEC meeting in Vienna on Thursday to see is whether a deal to prolong output cuts can be struck.
The pound was nearly flat at $1.2957 GBP=D4 , with the market awaiting further developments in Britain's suspended election campaign after the suicide bombing in Manchester.
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