Dollar draws strength ahead of rate decision
Expectations of a rate rise gathered momentum in the US in light of new economic data, strengthening the dollar.
This morning the dollar stood at 1.7710 to the pound and 1.2007 to the euro, while it was at a 25-month high against the yen.
Figures from the US Commerce Department indicated that consumer spending had risen in September, as the aftermath of Hurricane Katrina subsided.
In August a 0.5 per cent dip was attributed largely to the storm, but September saw that deficit made up - with household income also on the increase, up 1.7 per cent.
Now analysts are tipping the Federal Reserve to continue to push up the interest rate, with most anticipating a quarter percentage rise to four per cent this week.
Citigroup strategist Eric Darwell told Bloomberg that there was a "positive outlook for the dollar" ahead of the rate decision as the currency looked set to make further gains.