2014.10.2414:00:00UTC+00Dollar Fluctuates Ahead Of Crucial Fed Meeting

The dollar weakened Friday, unable to sustain much direction over the course of the week amid uncertainty about the timing of a U.S. interest rate hike.

The Federal Reserve may provide some clarity next Wednesday with the release of their latest monetary policy statement.

Markets expect the Fed to fully wind down their once-massive quantitative easing program, but opinions are divided about whether policy makers will signal that interest rates will begin to rise before next summer.

Recent U.S. economic data has been mixed, and with the nation's sluggish economic recovery jeopardized by growing problems in Europe and elsewhere, the Fed may be reluctant to tighten in the first half of 2015.

In today's economic news, U.S. new home sales inched up 0.2 percent to an annual rate of 467,000 in September from the revised August rate of 466,000.

The dollar slipped to $1.27 versus the euro, staying away from a 2-year peak near $1.25 seen earlier in October.

The euro gained even after a draft statement reportedly showed more than two dozen banks will fail the European Central Bank's stress test.

German consumer climate for November improved unexpectedly, survey data revealed. The forward-looking consumer confidence index rose slightly to 8.5 in November from 8.4 in October, market research group GfK said. The score was forecast to fall to 8.

The buck edged down to $1.61 versus the sterling despite some downbeat economic news from the U.K.

The U.K. economy grew at a slower pace in the third quarter, preliminary estimates from the Office for National Statistics Office showed. Gross domestic product climbed 0.7 percent from the second quarter, when it grew 0.9 percent.

The dollar drifted slightly lower near Y108 versus the yen, staying away from October's 6-year peak of Y110.