By Michael Kitchen, MarketWatch LOS ANGELES (MarketWatch) — The U.S. dollar stuck to its upward trend Friday, rising modestly with the Federal Reserve’s annual gathering in Jackson Hole, Wyo., in focus. The ICE dollar index DXY +0.18% , which measures the U.S. currency against six others, rose to 81.551 from 81.480 late in North America, adding to the gains made the previous day Thursday. The rival WSJ Dollar Index XX:BUXX +0.21% improved to 73.99 from late Thursday’s 73.93. The ICE dollar index has moved in a relatively constrained range in August, after trading above 84 early last month, with the market awaiting word from the U.S. Federal Reserve that it is reducing its stimulus. The Fed currently buys $85 billion worth of securities a month to help support the economy, but it has signaled its intent to soon slow the pace of those purchases as the economy recovery gains pace. Many economists believe the so-called “taper� of the stimulus will be announced at the end of the next Fed meeting on Sept. 18. Crédit Agricole analysts wrote Friday that with taper expectations already priced into the dollar, the greenback’s gains may be capped for now. “There is little scope for Fed monetary policy expectations to drive the U.S. dollar considerably higher in the short term. Consensus expectations [for the taper] already shifted to September, while there remains scope for an adjustment lower, should incoming U.S. data fail to exceed expectations sufficiently,� they wrote to clients. With the Fed’s Jackson Hole gathering set to kick off later Friday, investors will be watching for any further policy clues, even though Fed Chairman Ben Bernanke won’t be in attendance. Also on tap are data on U.S. new-home sales, with economists polled by MarketWatch expecting a drop to a seasonally adjusted level of 485,000 in July, down from 497,000 in June Among the major currency pairs, the euro EURUSD -0.10% = slipped to $1.3349 from $1.3358 late Thursday, while the British pound GBPUSD -0.28% bought $1.5584, little changed from $1.5585. The Japanese yen weakened, with the dollar USDJPY +0.32% rising to ¥98.96 from ¥98.71, and the Australian dollar AUDUSD -0.15% climbing to 90.22 U.S. cents from 90.13 cents. Among emerging-market currencies, the Indian rupee USDINR -0.69% continued to languish near record low levels, with the dollar buying 64.540 rupees, near its 65.548-rupee level late Thursday. Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles. You can follow him on Twitter at @KitchenNews.

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