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Dollar Loses Ground Against Major Rivals After Inflation Data

The U.S. dollar shed ground against most of its major rivals on Wednesday after data showed a sharper than expected acceleration in U.S. consumer price inflation in the month of September.

Data released by the Labor Department this morning showed that the consumer price index climbed 0.4% in September after rising by 0.3% in August. Economists had been expecting another 0.3% increase.

Excluding food and energy prices, core consumer prices edged up by 0.2% in September after inching up by 0.1% in August. The uptick in core prices matched economist estimates.

The report showed the annual rate of growth in consumer prices accelerated to 5.4% in September from 5.3% in August, while the annual rate of growth in core prices was unchanged at 4%.

The Federal Reserve's minutes of its September monetary policy has shed some additional light on the central bank's assessment that a moderation in the pace of asset purchases may "soon be warranted."

The minutes revealed participants generally agreed that a gradual tapering of asset purchases that concludes around the middle of next year would likely be appropriate if the economic recovery remained broadly on track.

Participants noted that if a decision to begin tapering purchases occurred at the Fed's next meeting in early November, the process of tapering could begin with the monthly purchase calendars beginning in either mid-November or mid-December.

The meeting also included a discussion on how slowing the current rate of bond purchases of $120 billion per month might proceed.

The dollar index dropped to 94.02, down more than 0.52% from the previous close.

Against the Euro, the dollar drifted down to $1.1594 from Tuesday's close of $1.1532. Eurostat data released earlier in the day showed Eurozone industrial output declined for the first time in three months in August, dropping 1.6% month-on-month, reversing a 1.4% rise in July.

The Pound Sterling firmed to $1.3664 a unit, rising from $1.3588, as strong U.K. GDP data for August intensified hopes for a rate hike by the Bank of England before the end of the year.

Data from the Office for National Statistics showed that the UK's gross domestic product grew 0.4% on month in August, but slightly slower than the economists' forecast of 0.5%.

The Yen strengthened to 113.29 a dollar, gaining from 113.61.

Against the Aussie, the dollar eased to 0.7383 from 0.7351.

The Swiss franc strengthened to 0.9236 a dollar from 0.9307, while the Loonie climbed more than 0.2% at 1.2443 against the U.S. dollar.

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