Investing.com - The dollar trimmed losses and continued to trade within close distance of a 14-year high against the other majors currencies on Tuesday, after upbeat U.S. data boosted optimism over the U.S. economy and added to expectations for a rate hike by the Federal Reserve.
The U.S. Commerce Department said retail sales rose 0.8% in October, compared to expectations for a 0.6% increase.
Core retail sales, which exclude automobile sales, increased by 0.8% last month, compared to forecasts for an advance of 0.5%.
In addition, the Federal Reserve of New York said its Empire State manufacturing index climbed to 1.50 in November from -6.80 the previous month. Analysts had expected to improve to -2.50 this month.
The dollar also remained broadly supported amid hopes that increased fiscal spending and tax cuts under a Trump administration will bolster economic growth and inflation.
EUR/USD was up 0.11% at 1.0749, after rising to highs of 1.0840 hit earlier in the day and not far from Monday’s 10-month trough of 1.0706.
Earlier Tuesday, preliminary data showed that German gross domestic product rose .2% in the third quarter, disappointing expectations for an incease of 0.3% and down from a growth rate of 0.4% in the previous quarter.
A separate report showed that the ZEW German economic sentiment index rose to 13.8 this month from October’s reading of 6.2. Analysts had expected the index to increase to 8.1 in October.
Elsewhere, GBP/USD dropped 0.58% to 1.2423 after the U.K. Office for National Statistics reported that the consumer price index rose 0.1% in October, compared to expectations for a 0.3% gain.
Year-on-year, consumer prices rorse 0.9% last month, below forecasts for a gain of 1.1%.
USD/JPY was little changed at 108.45, just off the previous session’s five-month high of 108.55, while USD/CHF rose 0.27% to 1.0004.
The Australian and New Zealand dollars moved lower, with AUD/USD down 0.11% at 0.7547 and with NZD/USD shedding 0.20% to 0.7103.
Also Tuesday, the minutes of the the Reserve bank of Australia’s November meeting mentioned that underlying inflation is expected to return to normal levels over time and that the Australian economy is seen growing close to potential over the next few quarters, before picking up further.
Meanwhile, USD/CAD fell 0.24% to trade at 1.3530, not far from Monday’s nine-month peak of 1.3589.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 100.09, off session lows of 99.48 and just off Monday’s 11-month peak.
On Monday, the index hit highs of 100.24, a level not seen since December 2015 and if it rises above the highs of 100.51 set in December 2015, it would reach its highest level since April 2003.