Investing.com – The U.S. dollar inched higher on Tuesday, as a leading indicator of inflation rose, increasing pressure on the Federal Reserve to raise rates.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.13% to 97.31 as of 10:29 AM ET (15:29 GMT).
The core producer price index increased more than expected in November. The Federal Reserve keeps its eye on this data because, when producers pay more for goods, they are more likely to pass price increases on to the consumer.
The dollar has been under pressure recently amid expectations that the Fed will pause its rate of interest rate hikes and trade tensions between the U.S. and China.
Meanwhile, the pound pared back earlier gains after German Chancellor Angela Merkel said the European Union would not renegotiate its Brexit deal. UK Prime Minister Theresa May pushed back a planned Parliament vote on the draft of the Brexit deal in the hopes of striking a better deal with Brussels.
GBP/USD was at 1.2557, down from an earlier high of 1.2629.
The dollar was slightly lower against the safe-heaven Japanese yen, with USD/JPYfalling 0.03% to 113.30. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.