U.S. Dollar Appreciates As Employment Costs Jump

The U.S. dollar firmed against its major counterparts in the New York session on Tuesday, amid a spike in employment cost index in the first quarter before the Federal Reserve's policy decision on Wednesday.

The employment cost index increased 1.2 percent from 0.9 percent in the fourth quarter. Economists had expected the index to rise to 1 percent.

Investors eagerly await the Fed's policy meeting, which gets underway today.

No change in interest rates is expected, but the accompanying policy statement and remarks by Fed Chair Jerome Powell may offer some clues on when the U.S. central bank might cut interest rates in the coming months.

Recent economic data has tamped down expectations of a near-term rate cut, with the central bank now seen as likely to leave rates unchanged until at least September.

The greenback moved up to a 1-week high of 0.5907 against the kiwi, 5-day high of 0.6489 against the aussie and near a 2-week high of 1.3754 against the loonie, off its early lows of 0.5981, 0.6567 and 1.3656, respectively. The greenback is seen finding resistance around 0.58 against the kiwi, 0.63 against the aussie and 1.39 against the loonie.

The greenback advanced to 1.2502 against the pound and 157.54 against the yen, from its early lows of 1.2563 and 156.05, respectively. The greenback is poised to challenge resistance around 1.22 against the pound and 160.00 against the yen.

The greenback strengthened to near a 7-month high of 0.9179 against the franc and a 4-day high of 1.0687 against the euro, reversing from an early low of 0.9092 and a 4-day low of 1.0735, respectively. The greenback is likely to find resistance around 0.93 against the franc and 1.05 against the euro.