The dollar drifted lower on Friday in thin, listless trading ahead of next week's Federal Reserve policymaking meeting that may yield the first interest rate increase in the United States in nearly a decade.
The dollar index, a basket of currencies valued against the dollar, traded in a small range and rose briefly when the government reported U.S. producer prices were unexpectedly flat during August.
Tame inflation, combined with a rapidly tightening labor market, are a dilemma for the Fed officials meeting Wednesday and Thursday to contemplate raising rates. A policy statement will be issued on Thursday.
Investors and currencies analysts were divided over whether a rate hike was likely and would keep the dollar in a tight trading band through next week, according to Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.