Investing.com - The dollar firmed against most major currencies on Tuesday after soft U.K. and euro zone economic indicators sparked demand for the greenback on expectations that U.S. monetary policy is set to diverge from its global counterparts.
In U.S. trading on Tuesday, EUR/USD was down 0.82% at 1.2648.
The dollar firmed against the euro and most other currencies on expectations that U.S. monetary policy is due tighten while European and Asian monetary authorities may take steps to loosen in the near future.
The U.S. is seen closing its monthly bond-buying programs this month and hiking interest rates in 2015, while ECB officials have said they will do what it takes to steer the euro zone away from deflationary decline, and Tuesday's data confirmed those sentiments.
The ZEW Centre for Economic Research reported earlier that its German economic sentiment index fell to -3.6 this month from September’s 6.9 reading. Analysts had expected the index to come in at 1.0 in October.
The index of euro zone economic sentiment plunged to 4.1 in September from 14.2 in August, well below expectations for a decline to 7.1.
A separate report showed that eurozone industrial production contracted 1.8% in August from July, outpacing expectations for a 1.6% decline. July's figure was revised to a 0.9% rise from a previously estimated 1.0% increase.
Year-on-year, industrial production fell 1.9% in August, surpassing expectations for a 0.9% decline and after rising at a rate of 1.6% the previous month.
The dollar was up against the yen, with USD/JPY up 0.05% at 106.90, and up against the Swiss franc, with USD/CHF up 0.62% at 0.9537.
The greenback was up against the pound, with GBP/USD down 1.07% at 1.5912.
The U.K. Office for National Statistics reported earlier that its year-on-year consumer price index slowed to 1.2% last month from 1.5% in August. Analysts had expected U.K. CPI to fall to 1.4% in September.
Month-over-month, consumer price inflation came in flat in September after rising 0.4% in August.
Core CPI, which excludes food, energy, alcohol, and tobacco costs, rose at a rate of 1.5% last month, down from 1.9% in August. Analysts had expected core prices to rise 1.8% in September.
Markets were also jittery amid the widening Ebola epidemic, as the U.K. announced on Monday that it will begin conducting fever tests for Ebola at Heathrow airport.
The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.96% at 1.1306, AUD/USD down 0.83% at 0.8702 and NZD/USD down 0.82% at 0.7829.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.77% at 85.93.