Investing.com - The dollar was close to recent 12 year highs against the other major currencies on Tuesday as oil prices continued to crumble, fuelling fears over disinflation and weighing on market sentiment.
Crude oil prices fell to almost six-year lows on Tuesday, with the latest selloff coming after OPEC said it will not cut output despite a global supply glut. The rout in oil prices has fuelled concerns of exacerbating already low levels of inflation in many major world economies, including the euro zone.
The euro was close to nine-year lows, with EUR/USD down 0.38% to 1.1786.
Data last week showed that consumer prices in the euro area fell in December for the first time since October 2009. The decline in inflation fuelled expectations that the European Central Bank could implement quantitative easing measures as soon as its next meeting on January 22.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 92.44, not far from the 12-year peaks of 92.76 scaled last week, supported by weakness in the euro.
The dollar was also higher against the yen, with USD/JPY up 0.14% to 118.51, after falling to almost one-month lows of 117.74 overnight.
The pound closed in on a recent 18-month nadir, with GBP/USD touching lows of 1.5078 after data on Tuesday showing the annual rate of U.K. inflation rose at the slowest rate since May 2000 in December.
Official figures showed that annual rate of consumer inflation slowed to 0.5% last month, underlining expectations that the Bank of England will keep rates on hold this year.
Elsewhere, USD/CHF added 0.37% to trade at 1.0187.
The commodity-exposed Australian and New Zealand dollars were lower. AUD/USD slid to 0.8144, while NZD/USD was down 0.73% to 0.7725. The Aussie and the kiwi found some support earlier in the day after Chinese trade data showed that exports rebounded in December.
USD/CAD was down 0.30% to 1.1936 after rising to more than five-and-a-half year highs of 1.1994 earlier in the day.