Dollar turned higher in European trade after an earlier in dip in Asia, holding above week lows ahead of important US consumer spending data which will offer clues on growth and inflation in the third quarter.
The dollar is now heading for the first weekly loss in three weeks on active profit-taking from 20-year highs while risk appetite improves in the market.
The Index
The dollar index rose 0.8% to 112.64, after losing 0.85% yesterday, the second loss in a row after an intervention by Bank of England to boost the UK bonds market.
Spending Data
Later today, US consumer spending data will be released for August which will provide clues for performance in the third quarter.
Strong data will bolster the case for 0.75% rate hikes at the upcoming Federal Reserve meetings this year, in turn boosting the dollar.
US personal spending is expected up 6.6% in August, improving from a 6.3% increase in July, while core spending is expected up 4.7%.
On a monthly basis, personal spending is expected up 0.3% in August, while core personal spending is expected up 0.5%.
Weekly Trading
The dollar index is currently down 0.5% this week on track for the first weekly loss in three weeks on profit-taking away from 20-year highs at 114.78.
Risk appetite improved as well in the market after an aggressive intervention by Bank of England to boost the UK bonds market bu purchasing long-term treasury bonds in order to stabilize them.