Investing.com - The dollar remained moderately lower against the other major currencies on Wednesday after data showed that U.S. consumer prices fell for the first time in 16 months in August and as investors eyed the outcome of the Federal Reserve's policy meeting.
EUR/USD held steady at 1.2963.
The dip in the dollar came after the Labor Department reported that the U.S. consumer price index fell 0.2% in August, pulling the annual rate of inflation down to 1.7% from 1.9% in July.
The unexpected slowdown in inflation was due to falling energy prices the report said. Energy prices fell by 2.4% last month, including a 4.1% drop in gasoline prices.
Separately, the National Association of Home Builders/Wells Fargo said that its Housing Market Index increased to an almost nine-year high of 59.0 this month from 55.0 in August, above expectations for a reading of 56.0.
Demand for the dollar continued to be underpinned by heightened expectations for an early hike in U.S. interest rates ahead of the outcome of the Federal Reserve’s monetary policy meeting later Wednesday.
The Fed was expected to cut its asset purchase program by another $10 billion after the meeting, which would keep it on track for winding up the program in October.
Fed Chair Janet Yellen was to hold what would be a closely watched press conference following the meeting.
Elsewhere, GBP/USD climbed 0.40% to 1.6341, boosted by opinion polls showing support for the no vote narrowly in the lead ahead of Scotland’s independence referendum on Thursday.
Earlier Wednesday, a report showed that the U.K. jobless rate declined to 6.2% in the three months to July from 6.4% in the previous three month period. It was the lowest jobless rate since the late 2008.
USD/CHF was up 0.18% to 0.9343, off highs of 0.9352.
The Australian and New Zealand dollars remained broadly lower, with AUD/USD down 0.42% to 0.9056 and NZD/USD sliding 0.30% to trade at 0.8175. USD/CAD edged down 0.15% to 1.0954, off lows of 1.0949.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was steady at 84.18, slightly above session lows of 84.14.