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Dollar firms to eight-month high against euro

The dollar firmed on Tuesday against most other major currencies, especially the euro, as easing US consumer inflation data pointed to the Federal Reserve keeping a steady course on interest rates.

NEW YORK: The dollar firmed on Tuesday against most other major currencies, especially the euro, as easing US consumer inflation data pointed to the Federal Reserve keeping a steady course on interest rates.

The pace of inflation slowed in June, the Labour Department reported. The department's consumer price index rose 0.3 percent last month, after a hefty 0.4 percent rise in May.

Excluding food and energy prices, core CPI inched up 0.1 percent, after a 0.3 percent rise the prior month.

On a 12-month basis, the CPI was up 2.1 percent for a second consecutive month in June, while core CPI rose 1.9 percent.

The Federal Reserve, which holds a policy meeting on July 29-30, has a 2.0 percent inflation target for price stability. The Fed's preferred measure of inflation, the personal consumption expenditures price index, stood at an annual rate of 1.8 percent in May.

Fed officials have said the longer-term inflation outlook remains subdued, signaling no need to raise the central bank's near-zero interest rate until at least mid-2015.

"While we expect the Fed to taper asset purchases by another $10 billion next week, we do not anticipate a rush to raise interest rates," said Kathy Lien of BK Asset Management in a research note.

In earlier trade, the euro earlier tumbled to $1.3459, its weakest level against the greenback in eight months. It hit 136.59 yen, the lowest point in more than five months.

Lien said the euro fell "for no specific reason and that makes us extremely skeptical of the sustainability of EUR/USD's decline."

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