U.S. Dollar Nosedives On Slowing Inflation

(RTTNews) - The U.S. dollar lost ground against its major counterparts in the New York session on Tuesday, as the nation's inflation eased more than expected in October, cementing expectations that the Federal Reserve will keep interest rate unchanged in coming months.

Data from the Labor Department showed that inflation slowed to 3.2 percent in October from 3.7 percent in September. Economists had expected the pace of growth to decelerate to 3.3 percent.

Core consumer prices were up by 4.0 percent compared to the same month a year ago. The core CPI was expected to come in unchanged from 4.1 percent in the previous month.

On a monthly basis, the CPI was flat in October after climbing by 0.4 percent in September. Economists had expected consumer prices to inch up by 0.1 percent.

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

Following the data, markets are pricing in a 94.8 percent probability that the Fed will leave interest rates unchanged at its meeting in December.

U.S. treasury yields dropped, with the two-year yield falling to 4.85 percent.

The greenback fell to a 2-1/2-month low of 1.0836 against the euro and a 3-week low of 0.8917 against the franc, from yesterday's close of 1.0698 and 0.9015, respectively. The greenback is seen finding support around 1.10 against the euro and 0.87 against the franc.

The greenback weakened to a 2-month low of 1.2461 against the pound and a 6-day low of 150.68 against the yen, from Monday's close of 1.2278 and 151.72, respectively. The greenback is likely to face support around 1.27 against the pound and 144.00 against the yen.

The greenback depreciated to a 1-week low of 1.3730 against the loonie, from a 4-day high of 1.3843 seen at 6:45 am ET. The pair had finished yesterday's deals at 1.3796. Should the greenback falls further, it is likely to test support around the 1.35 region.

The greenback dropped to a 1-week low of 0.6481 against the aussie, from a 4-day high of 0.6347 hit at 8:30 am ET. At yesterday's trading close, the pair was quoted at 0.6376. Next near term support for the currency is seen around the 0.66 level.

The greenback slipped to an 8-day low of 0.5974 against the kiwi, reversing from nearly a 2-week high of 0.5854 it logged at 8:30 am ET. At Monday's close, the pair was valued at 0.5876. The currency may possibly face support around the 0.62 mark.