The US dollar rose against the yen and the euro on Wednesday but fell against the pound and a number of other currencies ahead of the Federal Reserve's decision on monetary policy.
The change in the dollar exchange rate came after the Department of Labor released data on labor costs in the first quarter of 2024. Labor costs rose 1.2% in the first quarter, up from 0.9% in the previous quarter, due to higher wages and benefits.
The data caused markets to revise their expectations for a Fed rate cut this year, causing Treasury yields to rise, Reuters reported.
Traders now expect the Fed to cut rates by just 29 basis points by December, down from more than 170 basis points at the start of the year.
The yield on the 10-year Treasury note rose 0.09% to 4.69%.
The US Dollar Index (DXY), which tracks the greenback against six major currencies, rose 0.02% to 106.3.
The Fed is expected to keep interest rates at 5.25-5.5%, so all traders' attention will be focused on Jerome Powell's comments after the US central bank's meeting.
The EUR/USD was up 0.04% at 1.0669, while the GBP/USD was down 0.04% at 1.2485.
The USD/JPY was up 0.05% at 157.88. The main reason for the yen's weakness is the interest rate differential between the Bank of Japan and the Fed, which is expected to remain significant for some time. At the same time, investor risk aversion, as evidenced by the decline in US and Asian stock markets, is limiting the pair's gains.
The AUD/USD and NZD/USD rose 0.14% and 0.09% to 0.6481 and 0.5892, respectively.
At the same time, the cryptocurrency market continues to fall, with Bitcoin trading below $57,789, down 6.5% in the last 24 hours.