The U.S. dollar rose to a two-week high on Wednesday as investors continued to take profits on short dollar positioning amassed toward the end of last year, even as they questioned market expectations of roughly six interest rate cuts in 2024.

For December, the dollar fell about 2%.

Trading was relatively subdued, with Japanese markets shut for a holiday and markets digested softer-than-expected U.S. economic data released earlier on Wednesday.

The dollar, on the other hand, earlier moved in tandem with Treasury yields, with those on the 10-year hitting 4% for the first time in two weeks. But the 10-year yield has since declined to 3.90%, down 4.1 basis points (bps). Yet the dollar index held gains and was last up 0.2% at 102.45, after earlier touching a two-week peak of 102.61.

Minutes of the Dec. 12-13 Federal Reserve meeting released on Wednesday showed officials were convinced inflation was coming under control and were concerned about the damage that "overly restrictive" monetary policy might do to the economy.

However, participants "stressed ... that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee's objective."

In other currencies, the euro was last down 0.2% against the dollar at $1.0924. It earlier fell to $1.0893, its lowest since mid-December, and dropped 0.95% on Tuesday in its biggest daily decline since July.

The greenback was last up 0.9% against Japan's yen at 143.31, on track for its largest daily gain since late October. Earlier in the session, the greenback hit a two-week high of 143.73.

Sterling was last up 0.4% at $1.2666. It slid 0.87% in the previous session, its sharpest daily fall in nearly three months.

Source : Reuters