Dollar declines vs. rivals with U.S. data on tap – The dollar declined against the other major currencies on Tuesday, as recent downbeat U.S. data continued to weigh on the greenback and investors eyed a fresh batch of U.S. economic reports due later in the day.
The euro was higher against the dollar, with EUR/USD up 0.32% to 1.1390.
The euro found support after the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 4.6 points to 53.0 this month from January’s reading of 48.4. It was the highest reading since February 2014, but was still below expectations of 55.0.
But investors remained cautious as Greece’s current €240 billion bailout is due to expire at the end of the month and the new Greek government does not want it extended. Athens rejected a proposed six-month extension of the bailout on Monday, calling it “unacceptable”.
Athens has until Friday to request an extension otherwise its bailout will expire on February 28 and the country will run out of money.
The clash between Greece and its creditors has sparked fears that it could trigger the country’s exit from the euro zone. The European Central Bank was to decide whether to suspend emergency financial support for Greece later in the day.
The pound edged higher against the dollar, with GBP/USD adding 0.14% to 1.5386.
In a report, the U.K. Office for National Statistics said the rate of consumer price inflation decelerated to 0.3% last month from 0.5% in December, broadly in line with market expectations.
Month-over-month, consumer price inflation declined 0.9% in January, compared to expectations for a drop of 0.8% and after holding flat in December.
Bank of England Governor Mark Carney will now have to write an open letter to the Chancellor of the Exchequer, George Osborn, as inflation is more than a percentage point below the central bank’s target of 2.0%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a rate of 1.4% last month, up from 1.3% in December and above forecasts for a reading of 1.3%.
Elsewhere, USD/JPY rose 0.34% to trade at 118.87, while USD/CHF held steady at 1.9315.
The Australian and New Zealand dollars were higher, with AUD/USD gaining 0.58% to 1.7818 and NZD/USD advancing 0.46% to 0.7536.
In the minutes of its February policy meeting, the Reserve Bank Australia earlier said that it cut rates this month due to the deteriorating economic outlook.
Meanwhile, the Canadian dollar gained some ground, with USD/CAD retreating 0.71% to 1.2378.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.40% to 94.08.