U.S. Dollar Climbs Ahead Of Fed Minutes

The U.S. dollar strengthened against its major rivals in the Asian session on Wednesday, as investors look forward to the release of Federal Reserve's minutes from the May meeting for more clues about the possibility of a rate hike in June.

The minutes, to be released at 2:00 pm ET, would shed more light over whether the central bank's monetary policy outlook has been influenced by recent economic data and geopolitical developments.

Despite recent sluggish data, market participants expect the Fed to raise rates in June and possibly later this year for a third time in 2017.

According to CME Group's FedWatch program, Futures traders are pricing in nearly 80 percent chance of a June rate hike.

The dollar bulls received support from the U.S. President Donald Trump budget plan, which calls for $4.1 trillion in government spending in 2018. The budget proposes increase in military and infrastructure spending, while cutting social spending in areas such as healthcare and food assistance.

Speaking in New York on Tuesday, Philadelphia Fed President Patrick Harker said that June hike is a distinct possibility ... quite possible." Harker also backed his support for two more rate hikes in this year.

The greenback was higher against its major rivals on Tuesday. It rose 0.5 percent against the euro, 0.4 percent against the yen and 0.3 percent each against the franc and the pound for the day.

The greenback rose to a 1-week high of 112.03 against the yen, from yesterday's closing value of 111.79. If the greenback-yen pair extends rise, it may target 114.00 as the next resistance level.

The greenback that closed Tuesday's deals at 0.9760 against the Swiss franc and 1.1181 against the euro climbed to a 5-day high of 0.9769 and a 2-day high of 1.1171, respectively. On the upside, 0.99 and 1.10 are possibly seen as the next resistance levels for the greenback against the franc and the euro, respectively.

The greenback advanced to 2-day highs of 1.3540 against the loonie and 0.7443 against the aussie and held steady thereafter. Continuation of the greenback's uptrend may see it targeting resistance around 1.36 against the loonie and 0.73 against the aussie.

On the flip side, the greenback edged down to 1.2983 against the pound, off its previous high of 1.2955. The next possible support for the greenback is seen around the 1.32 mark.

Looking ahead, at 4:30 am ET, the European Central Bank Chief Economist Peter Praet gives a lecture on challenges and opportunities for the European banking sector in 2017.

At 8:45 am ET, the ECB President Mario Draghi speaks at the First Conference on Financial Stability organised by Bank of Spain, in Madrid.

The U.S. house price index for March, existing home sales for April and the Federal Reserve's minutes of the May meeting are due in the New York session.

The Bank of Canada announces its decision on interest rates at 10:00 am ET. Economists expect the bank to keep rates on hold at 0.50 percent.