Dollar Poised To Snap 4-day Winning Streak

The U.S. dollar looked to snap a four-day winning Tuesday as investors took advantage of light trading volume to unload some of their holdings in the buck.

The index , which comprises six rival currencies with the euro the most heavily weighted among them, was down 0.2% to 97.8880. It has gained 8.5% since the beginning of the year.

Currency strategists from Brown Brothers Harriman said short-term investors were selling dollars to lock in profits. The dollar has steadily appreciated over the last two weeks.

But while it was slightly weaker on the day, the dollar remained within its recent trading range against most of its rivals, suggesting that investors are confident Federal Reserve policy makers will raise interest rates at their September meeting.

Higher interest rates would increase the return on dollar-held deposits, making it more attractive to global investors.

Currencies that are heavily influenced by commodity prices–including the Canadian dollar and Australian dollar –were flat, mirroring the action in crude-oil and gold prices. Both commodities were little-changed from Monday’s close.

Of the commodity-dependent currencies, the kiwi –an informal name for the New Zealand dollar–outperformed for the second straight day. The currency was up 0.5%, from 65.74 cents to 66.05 cents.

Several currency strategists, including Boris Schlossberg, managing director of FX strategy at BK Asset Management, said trading volume would likely remain subdued Tuesday for the second straight session. He noted that volume might pick up later in the week when data on existing- and new- U.S. home sales is released. A widely watched reading on eurozone manufacturing and service-sector activity is also expected Friday.

The dollar continued to strengthen against the pound , with the British currency falling 0.2% to $1.5546, from $1.5568 late Monday in New York. But the buck was little-changed against the yen at Yen124.35.