Dollar Trading Mixed As Investors Await Fed Announcement

The dollar is turning in a mixed performance against its major rivals Tuesday afternoon. The U.S. currency is slightly higher against the Euro and the Japanese Yen, but is losing ground against the British pound.

Investors are playing it cautious ahead of Wednesday's announcement from the Federal Reserve. The Fed will release a statement upon the conclusion of its 2-day policy meeting tomorrow afternoon. While other central banks have hinted at further stimulus measures in the last few weeks, the Fed has remained silent.

The Fed raised interest rates for the first time in a decade back in December and many investors were under the impression that the central bank would announce another 4 rate hikes in 2016. However, that was before the sharp sell-off in global equity markets on concerns over the health of the global economy that has plagued January.

Investors will be watching tomorrow's Fed announcement closely for clues about when the Fed plans to tighten again. Many believe the Fed will announce a delay to its interest rate hikes, given the current market environment.

Global economic data was rather sparse Tuesday, but there were a pair of U.S. economic reports this morning. With home prices in major U.S. metropolitan areas rising more than expected on a monthly basis, Standard & Poor's released a report on Tuesday showing a notable acceleration in the annual rate of home price growth in November.

The report said the S&P/Case-Shiller 20-City Composite Home Price Index was up by 5.8 percent year-over-year in November compared to the 5.5 percent annual growth reported in October. Economists had expected the pace of growth to accelerate to 5.7 percent.

Consumer confidence in the U.S. has unexpectedly improved in the month of January, according to a report released by the Conference Board on Tuesday. The Conference Board said its consumer confidence index climbed to 98.1 in January from a downwardly revised 96.3 in December.

Economists had expected the index to edge down to 96.0 from the 96.5 originally reported for the previous month.

The dollar is currently trading around $1.0850 against the Euro, which is nearly flat for the session. The U.S. currency reached a high of $1.0817 and a low of $1.0874.

The buck rose to an early high of $1.4172 against the pound sterling Tuesday, but has since pulled back to around $1.4360.

The greenback slipped to a low of Y117.649 against the Japanese Yen Tuesday morning, but has since rebounded to around Y118.485.

Producer prices in Japan were up 0.4 percent on year in December, the Bank of Japan said on Tuesday. That exceeded forecasts for an increase of 0.2 percent, which would have been unchanged from the November reading. On a monthly basis, prices ticked up 0.1 percent following the 0.2 percent gain in the previous month.