Dollar remains broadly weaker after U.S. data, Bernanke eyed

The dollar remained broadly lower against the other major currencies on Tuesday after better-than-expected U.S. inflation data for June as investors focused on congressional testimony by Federal Reserve Chairman Ben Bernanke on Wednesday.

During U.S. morning trade, the dollar was trading close to session lows against the euro, with EUR/USD up 0.52% to 1.3128.

Data on Tuesday showed that U.S. consumer prices rose more than expected in June, while another report showed that industrial production also beat expectations last month.

The Labor Department said U.S. consumer prices rose by a seasonally adjusted 0.5% in June, compared to expectations for a 0.3% increase, after rising by 0.1% in May. 

Year-over-year, consumer prices rose by 1.8%, above expectations for a 1.7% gain and up from 1.4% in May.

Meanwhile, the Federal Reserve said U.S. industrial production rose 0.3% in June, above expectations for a 0.2% increase.

The dollar remained under pressure as investors awaited Bernanke’s testimony on monetary policy Wednesday, amid speculation over the timing of a possible reduction to the bank’s USD85 billion-a-month bond buying program.

The dollar fell sharply last week after Bernanke said the U.S. economy still needed monetary stimulus.

The single currency shrugged off data showing that the ZEW index of economic sentiment in Germany deteriorated unexpectedly in July.

The ZEW Centre for Economic Research said that its index of German economic sentiment fell to 36.3 in the current month from 38.5 in June. Analysts had expected a reading of 39.6.

Elsewhere, the dollar was fractionally higher against the pound, withGBP/USD dipping 0.05% to 1.5089. 

Sterling fell to session lows against the greenback earlier after official data showed that consumer price inflation in the U.K. rose slightly less-than-expected in June.

The Office for National Statistics said U.K. consumer price inflation rose 2.9% from a year earlier in June, coming in below expectations for a 3.0% increase and up from 2.7% in May. 

The dollar was weaker against the yen and the Swiss franc, withUSD/JPY down 0.42% to 99.42 and USD/CHF falling 0.68% to 0.9417. 

The greenback was broadly lower against its Australian, New Zealand and Canadian counterparts, with AUD/USD rallying 1.44% to 0.9227,NZD/USD up 0.80% to 0.7869 and USD/CAD sliding 0.08% to 1.0418.

The Australian dollar was boosted after the minutes of the Reserve Bank of Australia’s July meeting said that the recent weakness in the Australian dollar would push inflation slightly higher.

In Canada, official data showed that manufacturing sales rose 0.7% in May, undershooting expectations for a 1% increase.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.38% to 82.88.