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Dollar Up As U.S. Inflation Remained Flat; Trump Mulls Signing Spending Deal


The U.S. dollar drifted higher against its key counterparts in the European session on Wednesday, as a data showed that U.S. consumer inflation remained unchanged in January and on media reports that President Trump is willing to sign a Congressional spending package on a border security agreement to avert another partial government shutdown.

Data from the Labor Department showed that U.S. consumer prices were unchanged for the third straight month in January.

The Labor Department said its consumer price index was unchanged in January, matching the revised reading for December. Economists had expected consumer prices to inch up by 0.1 percent.

Excluding food and energy prices, core consumer prices rose by 0.2 percent for the fifth consecutive month. The uptick in core prices matched economist estimates.

Sentiment bolstered following media reports that Trump is likely to sign the Congressional deal to keep the government funded and avoid another shutdown.

The White House Press Secretary Sarah Sanders told Fox News that President is considering every option possible to get the full funding needed in order to complete the wall.

Congress faces a deadline on Friday midnight to pass legislation to avert another U.S. government shutdown.

The currency showed mixed trading against its major counterparts in the Asian session. While it dropped against the euro and the pound and it held steady against the franc. The yen advanced.

The greenback added 0.4 percent to a 1-1/2-month high of 110.89 against the yen, from a low of 110.42 seen at 5:15 pm ET. The pair was valued at 110.46 when it closed deals on Tuesday. Next key resistance for the greenback is seen around the 113.00 region.

Data from the Bank of Japan showed that Japan producer prices fell 0.6 percent on month in January - unchanged from the December reading but well shy of expectations for a decline of 0.2 percent.

On a yearly basis, producer prices climbed 0.6 percent - again missing forecasts for 1.0 percent and down from 1.5 percent in the previous month.

The greenback bounced off to 1.0075 against the franc, from a low of 1.0044 touched at 6:45 am ET. The greenback was trading at 1.0065 a franc at yesterday's trading close. On the upside, 1.02 is likely seen as the next resistance level for the greenback.

Having declined to a 5-day low of 1.1341 against the euro at 10:15 pm ET, the greenback bounced off and was trading higher at 1.1297. The pair had finished Tuesday's deals at 1.1324. Continuation of the greenback's uptrend may see it challenging resistance around the 1.11 mark.

Data from Eurostat showed that Eurozone industrial production decreased for a second straight month and at a faster-than-expected pace in December, but the fall was less severe than the previous month's decline.

Industrial production fell 0.9 percent from November, when it decreased 1.7 percent. Economists had expected a 0.4 percent decline.

The greenback briefly pared its early losses against the pound, recovering to 1.2890. This marked a 0.5 percent rise from a 5-day low of 1.2958 seen at 6:45 am ET. Further uptrend may take the greenback to a resistance around the 1.27 region.

Data from the Office for National Statistics showed that U.K. consumer prices rose at the slowest pace in two years in January, weaker than economists' forecast.

The consumer price index rose 1.8 percent year-on-year following a 2.1 percent increase in December. Economists had expected 2 percent inflation.

The greenback was up 0.5 percent at 1.3257 against the loonie, after having dropped to a weekly low of 1.3196 at 10:30 pm ET. The pair was worth 1.3235 at Tuesday's close. The greenback is seen finding resistance around the 1.34 level.

The greenback recovered to 0.7103 against the aussie, up by 0.5 percent from a weekly low of 0.7136 recorded at 11:15 pm ET. At Tuesday's close, the aussie-greenback pair was quoted at 0.7094. The greenback is likely to test resistance around the 0.70 mark, if it extends its rally.

Following a weekly decline to 0.6852 at 12:15 am ET, the greenback reversed its direction and rose back to 0.6805 against the kiwi. The pair had closed Tuesday's trading at 0.6735. The greenback is poised to test resistance around the 0.67 level.

The U.S. monthly budget statement for December is scheduled for release in the New York session.

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