The dollar climbed on Wednesday, nearing a 3 1/2-month high against the yen, as investor optimism about the greenback rose ahead of major announcements on U.S. fiscal and monetary policy after strong economic data.
The Federal Reserve kept U.S. overnight interest rates unchanged and highlighted "solid" economic growth at the conclusion of its two-day policy meeting. Analysts said the Fed's statement indicated that a rate hike next month is overwhelmingly likely.
Boris Schlossberg, managing director of FX Strategy at BK Asset Management, said the statement was the Fed's latest clue to the market that it planned to begin a cycle of interest rate increases rather than just a "one-and-done" hike.
"As that begins to disseminate to the market, thats going to be dollar positive," he said.
The Fed's decision followed strong data releases on the U.S. economy. The ADP National Employment survey showed private employers added 235,000 jobs in October, surpassing estimates for 200,000 and setting up expectations for a strong U.S. nonfarm payrolls report on Friday.