The U.S. dollar drifted lower against most of its major rivals in the European session on Tuesday after data showed the nation’s consumer prices increased by slightly less than expected in the month of August.
However, the dollar recovered some lost ground subsequently and even turned a bit strong against some of its peers.
The U.S. Labor Department said its consumer price index rose by 0.3% in August after climbing by 0.5% in July. Economists had expected consumer prices to increase by 0.4%.
The somewhat tame U.S. inflation data generated optimism that the Federal Reserve may delay plans to begin scaling back stimulus. However, comments from economists suggest the central bank might begin tapering its asset purchases in December.
The Fed is scheduled to hold a monetary policy meeting next week, with many expecting the central bank to provide an update on the outlook for its asset purchase program.
The dollar index, which slid to 92.32 in the European session, recovered gradually and was at 92.64 towards the end of the session, down 0.03% from the previous close.
Against the Euro, the dollar gained marginally to 1.1807, after having weakened to a low of 1.1847.
The Pound Sterling weakened against the dollar, and is fetching $1.3805 a unit, compared to $1.3838 Tuesday evening.
The Yen strengthened to 109.68 a dollar, firming from 110.01.
Against the Aussie, the dollar strengthened to 0.7320 from 0.7369.
The Swiss franc gained to 0.9204 from around 0.9220 a dollar.
The Loonie weakened to 1.2695 a dollar from 1.2650.