Investing.com - The dollar extended gains against the other major currencies on Wednesday, as investors eyed the outcome of the final Federal Reserve policy meeting of 2014 later in the day.
The dollar showed little reaction to a report by the U.S. Department of Labor showing that consumer prices fell 0.3% last month, compared to estimates for a decline of 0.1%, after a flat reading in October.
Consumer prices were 1.3% higher on a year-over-year basis, above expectations for a 1.4% reading after a 1.7% increase in October.
Core consumer inflation, which strips out food and energy costs, was up 0.1% from a month earlier and rose at an annual rate of 1.7%. Economists had forecast a monthly increase of 0.1% and an annual gain of 1.8%.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was up 0.83% to 88.79, off Tuesday's almost three-week lows of 87.83.
USD/JPY was up 0.89% to 117.45 after falling to one-month lows of 115.55 overnight.
The dollar received a boost after data earlier showed that Japan’s exports grew by a smaller-than-forecast 4.9% in November, despite the steep fall in the yen, as slower demand in Asia and Europe weighed.
The traditional safe haven yen rallied on Tuesday as a rout in oil prices continued, adding to fears over the global economic outlook and the impact of oil’s drop on weakening emerging market economies and their currencies.
The Russian ruble regained ground, with USD/RUB down 9.11% at 61.83 after the Finance Ministry said it had started selling foreign currency in an attempt to shore up the ruble.
The ruble fell to fresh record lows against the dollar on Tuesday, after a surprise interest rate hike failed to ease selling pressure on the currency from falling oil and western sanctions.
EUR/USD tumbled 0.90% to 1.2396 after official data earlier showed that consumer price inflation in the euro zone fell 0.2% in November, in line with market expectations. The bloc's CPI rose at an annualized rate of 0.3% last month, unchanged from October.
Core CPI in the euro zone, which excludes food, energy, alcohol and tobacco, ticked down 0.1% in November.
The data fuelled further concerns over persistently low levels of inflation in the euro area. The European Central Bank targets an inflation rate of close to, but just below 2%.
The pound was also lower, with GBP/USD down 0.55% to 1.5664 after data on Wednesday showed that U.K. average earnings rose by a stronger than forecast 1.4% in the three months to October, higher than inflation.
The U.K. unemployment rate was unchanged at 6.0% in the three months to October, compared to expectations for a tick down to 5.9%.
The dollar gained ground against the Swiss franc, with USD/CHF up 0.90% to 0.9685.
The Australian dollar was close to four-and-a-half year lows, with AUD/USD down 0.52% to 0.8177, while NZD/USD lost 0.81% to trade at 0.7739.
USD/CAD edged up 0.24% to 1.1657 after data showed that Canadian wholesale sales rose 0.1% in September, missing expectations for an increase of 0.9%, after a 1.8% gain in August.