Dollar Holds Strength against Euro in Asian Trade

The dollar sat near seven-month highs against the euro and stood firm against the yen Wednesday following a pick-up in U.S. inflation, while traders await minutes from the Federal Reserve's last policy meeting for clues about its plans for interest rates.

Ongoing weakness in the eurozone and Japanese economies continues to put pressure on their central banks to increase stimulus, putting pressure on their respective currencies.

The euro traded virtually unchanged at $1.0645 from $1.0644 Tuesday in New York, while the greenback dropped to 123.28 yen from 123.39 yen in U.S. trade.

Nervousness returned to markets on news that two Paris-bound Air France flights from the United States were diverted because of anonymous bomb threats. The planes landed safely and are undergoing safety checks.

Data showing U.S. inflation at 0.2 percent in October added to a string of comments out of the Fed in recent weeks hinting at a December rate hike, which would be the first since 2006.

"It looks like a big bet on the Fed finally putting its money where its mouth is," Sean Callow, a foreign-exchange strategist at Westpac Banking Corp in Sydney, told Bloomberg News.

"It looks as though the Fed will indeed kick off its tightening cycle in December, providing a stark contrast to other major central banks and thus providing durable support for the dollar."

Emerging market currencies lost some of their previous steam against the dollar, offsetting Tuesday's gains as dealers look to investing in the United States in search of better and safer returns. 

The South Korean won and Malaysian ringgit both fell 0.2 percent, while Indonesia's rupiah declined 0.3 percent and the Thai baht dropped 0.1.