Investing.com - The dollar pushed higher against the other major currencies on Wednesday, but gains were checked by tepid inflation data and concerns over political instability in the wake of the sudden firing of U.S. Secretary of State Rex Tillerson.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, edged up to 89.77 by 04:40 AM ET (08:40 AM GMT).
The index ended the previous session lower after the Labor Department reported Tuesday that U.S. consumer price inflation remained muted in February, indicating that the Federal Reserve is likely to stick to a gradual pace of rate hikes this year.
The inflation data came after last week jobs report showed tepid wage growth, easing concerns over a faster than expected pickup in inflation.
Some investors had speculated a strong inflation reading could prompt the Fed to increase its planned pace of interest rate increases above the three projected at the banks’ December meeting.
The Fed is to hold a two-day policy meeting starting next Tuesday and is widely expected to hike rates for the first time this year.
The dollar came under additional selling pressure after U.S. President Donald Trump fired Secretary of State Rex Tillerson on Twitter on Tuesday, replacing him with Central Intelligence Agency Director Mike Pompeo.
The news undermined investor confidence in the U.S. currency.
The dollar gained ground against the euro, with EUR/USD sliding 0.10% to 1.2378.
The dollar was fractionally higher against the yen, with USD/JPY edging up to 106.66.
The yen had come under pressure since the start of the week amid a growing cronyism scandal linked to the Japanese Prime Minister Shinzo Abe and his wife involving the sale of public land.
The scandal raised concerns over Abe’s ability to continue pursuing his Abenomics policies, which include aggressive monetary easing.
The pound was a touch lower, with GBP/USD dipping 0.09% to 1.3950.