Investing.com - The dollar remained near its highest level in six weeks against a basket of other major currencies on Tuesday, after data showed that consumer price inflation in the U.S. rose broadly in line with expectations in June and as geopolitical tensions continued to support safe haven demand.
EUR/USD was down 0.33% to 1.3480, the lowest since February 2.
The U.S. Department of Labor said that consumer prices rose by 0.3% last month, meeting estimates, after rising 0.4% in May.
Year-over-year, consumer prices rose at an annualized rate of 2.1% in June, in line with expectations and unchanged from May.
Consumer prices, excluding food and energy costs, inched up 0.1% last month, compared to expectations for a 0.2% gain. Core consumer prices rose 0.3% in May.
Meanwhile, the diverging monetary policy path between the European Central Bank and other central bank’s continued to weighed on the single currency since the ECB cut rates to record lows on June 5, in a bid to stave off the threat of deflation in the euro area.
In contrast, Federal Reserve Chair Janet Yellen indicated last week that interest rates may rise sooner if the economy continues to improve. Investors were looking ahead to U.S. data on consumer prices later in the day, for further indications on the strength of the recovery.
The dollar was steady against the yen, with USD/JPY inching up 0.04% to 101.43 and higher against the Swiss franc, with USD/CHF up 0.33% to 0.9009.
Market sentiment mildly recovered on Tuesday, but investors continued to eye heightened tensions between the West and Russia following the downing of a Malaysian airliner in eastern Ukraine late last week, while Israel’s ground offensive in Gaza also remained in focus.
The pound was little changed against the dollar, with GBP/USD down 0.04% to 1.7069.
Earlier Tuesday, official data showed that the U.K. public finances showed a bigger than expected deficit in June. The U.K. borrowed £11.38 billion last month, compared to expectations for a deficit of £10.66 billion. In the same month last year, the U.K. borrowed £7.59 billion.
The Australian dollar climbed higher, with AUD/USD up 0.44% to 0.9415 after Reserve Bank Governor Glenn Stevens said Tuesday he is content with current monetary policy and added that the bank is ready to do more if needed.
Elsewhere, NZD/USD dipped 0.01% to 0.8689, while USD/CAD inched up 0.01% to 1.0738.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.20% to 80.77, the highest since June 18.