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Forex - Dollar broadly higher after U.S. data

Published 07/22/2014, 11:17 AM
Updated 07/22/2014, 11:17 AM
Dollar gains ground after U.S. data

Dollar gains ground after U.S. data

Investing.com - The dollar advanced to eight month highs against the euro on Tuesday after data showing that U.S. consumer prices rose in June added to indications that the economic recovery is progressing.

EUR/USD was down 0.41% to 1.3467, the lowest since November 21.

The dollar was boosted after official data on Tuesday showed that the annual rate of U.S. inflation was at 1.2% in June, unchanged from the previous month and in line with forecasts.

On a month-over-month basis, U.S. consumer prices were up 0.3% after a 0.4% increase in May.

Core inflation, which excludes food and energy costs, rose by just 0.1% month-on-month, or 1.9% from the same month last year.

Another report showed that U.S. existing home sales increased 2.6% to 5.04 million units last month from 4.91 million in May. Analysts had expected existing home sales to rise 2% to 4.97 million units.

The data fuelled speculation over the timing of a possible U.S. rate hike.

The diverging monetary policy path between the European Central Bank and other central banks has 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.

The dollar also gained ground against the yen and the traditional safe haven Swiss franc, with USD/JPY rising 0.14% to 101.53 and USD/CHF up 0.48% to 0.9022.

The pound edged lower, with GBP/USD slipping 0.13% to 1.7053.

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 remained higher, with AUD/USD rising 0.17% to 0.9389 after Reserve Bank Governor 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 was down 0.29% to 0.8660, while USD/CAD edged up to 1.0745.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.33% to 80.88, the highest since June 18.

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