The U.S. dollar was down sharply Tuesday as tame U.S. inflation data affirmed expectations the Federal Reserve will continue to hold off raising interest rates. But a slump in the pound limited downside in the greenback ahead of a key U.K. vote.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.23% to 96.95.
The Labor Department said its core consumer price index slowed to 0.1% last month after edging up 0.2% in January. For the year through February the core consumer price index rose 2.1%, missing expectations for a 2.2% increase.
With core metrics running right around 2%, there's little to force the Federal Reserve to abandon its wait-and-see approach on rate hikes, BMO said.
Downside in the dollar was limited somewhat by a plunge in the pound as U.K. Prime Minister Theresa May will likely see her renegotiated withdrawal deal suffer another defeat ahead of a vote in parliament later today at 19:00 GMT (3:00 PM ET).
Ahead of the vote, Attorney General Geoffrey Cox said last-minute concessions secured from the EU on the Irish backstop arrangement reduced risk, but did not eliminate the U.K. being trapped in a customs union with the bloc indefinitely.
GBP/USD fell 0.49% to $1.3087, but had traded as low as $1.3003 in the aftermath of the Cox's published remarks.
EUR/USD rose 0.40% to $1.1292 as the single currency continued to pare losses from last week when the European Central Bank downgraded its outlook on euro-area growth and introduced fresh stimulus to prop up bank lending.
USD/JPY rose 0.13% to Y111.34, while USD/CAD fell 0.10% to C$1.3376.
