Dollar Dips As Soft U.S. Inflation Data Reinforces Slower Rate Hike Bets

(RTTNews) - The U.S. dollar lost ground against its major counterparts in the European session on Tuesday, as the nation's consumer inflation slowed more than expected in November, supporting expectations for a slowdown in the pace of rate hike at the U.S. Federal Reserve's monetary policy meeting ending tomorrow.

Data from the Labor Department showed that the consumer price index crept up by 0.1 percent in November after climbing by 0.4 percent in October. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices edged up by 0.2 percent in November after rising by 0.3 percent in October. Core prices were expected to show another 0.3 percent increase.

The report also showed the annual rate of growth by consumer prices slowed to 7.1 percent in November from 7.7 percent in October.

The annual rate of growth by core consumer prices also slowed to 6.0 percent in November from 6.3 percent in October, while economists had expected price growth to slow to 6.1 percent.

The Fed begins its two-day meeting today and will announce the policy decision on Wednesday.

Economists expect that the central bank will raise rates by 50 basis points to a range of 4.25 percent to 4.50 percent.

The currency showed mixed trading against its major counterparts in the Asian session. While it rose against the yen, it weakened against the euro and the pound. Versus the franc, it held steady.

The USD/JPY pair fell to an 8-day low of 134.65, from near a 2-week high of 137.97 seen at 11:20 pm ET. The pair was worth 137.66 when it ended deals on Monday. The greenback is seen finding support around the 113.00 mark.

The greenback dropped to over a 6-month low of 1.0673 against the euro. The pair had closed Monday's deals at 1.0537. Further fall in the greenback may find support around the 1.08 mark.

The USD/CHF pair fell below the 0.93 level, hitting more than an 8-month low of 0.9232. At Monday's close, the pair was valued at 0.9362. The greenback may face support around the 0.90 region, if it falls again.

The greenback was lower against the pound, at over a 6-month low of 1.2444. The pound-greenback pair had finished yesterday's trading session at 1.2264. The greenback is likely to challenge support around the 1.26 mark.

The USD/CAD pair reached an 8-day low of 1.3522. The greenback was trading at 1.3634 per loonie at yesterday's close. Next near term support for the greenback is likely seen around the 1.33 level.

The greenback depreciated to a 3-month low of 0.6893 against the aussie and more than a 6-month low of 0.6513 against the kiwi, from yesterday's closing values of 0.6746 and 0.6382, respectively. Should the greenback falls further, it is likely to test support around 0.70 against the aussie and 0.68 against the kiwi.