Dollar rises on hopes of Fed hike in September

The dollar recovered against the euro and yen Tuesday as a selloff in Chinese stocks slowed, coaxing nervous investors to move back into the U.S. currency.

The ICE U.S. Dollar index DXY, -0.11% a measure of the dollar’s strength against a basket of six currencies, was up 0.2% to 96.6590.

But the dollars gains didn’t erase its declines from Monday’s session, as most investors were waiting for a policy statement from the Federal Reserve’s rate-setting committee, expected Wednesday afternoon following the close of its two-day meeting, said Colin Cieszynski, chief market strategist at CMC Markets.

Dollar bulls are hopeful the committee will suggest that it intends to raise the Fed’s short-term interest rate at its September meeting. A rate hike would be the first since 2006.

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