[NEW YORK] The dollar was mostly little changed against other major currencies Wednesday as investors waited for next week's Federal Reserve decision on whether to raise zero-level interest rates.
"Gains have been tougher to sustain for the dollar of late on the notion that even after nearly a decade it may still be too soon for the Fed to raise interest rates given risks to growth from stubbornly low inflation, China's slowdown and turbulent markets," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Manimbo said if global markets calm, that could clear the way for the Fed's policy-setting Federal Open Market Committee to raise the central bank's key federal funds rate, "which would leave the dollar ripe for a big bounce."
The greenback traded in a narrow range Wednesday, but notably firmed against the Japanese currency, buying 120.54 yen around 2100 GMT, up from 119.82 yen the prior day.
A number of analysts expect the Fed to leave the fed funds rate unchanged next week, especially after the market turmoil unleashed by China's surprise currency devaluation on August 11. The prospects for a hike remains uncertain, though the odds against it have risen since last Friday's mixed US jobs report.
"There are still two more FOMC meetings in 2015 after next week," Deutsche Bank analysts said in a research note.
"Thus, the Fed could wait a little bit longer to see if global financial markets settle down and if there is any negative impact on business and consumer confidence from recent market gyrations."