Investing.com - The U.S. dollar traded sharply lower against its major rivalsTuesday, as bullish speculation over a bailout for Spain supported demand for higher-yielding, riskier assets.
During U.S. afternoon trade, the dollar was lower against the euro, with EUR/USD up 0.77% to 1.3048.
Demand for the euro continued to be underpinned by persistent hopes that Spain will soon request a bailout from its euro zone partners.
Elsewhere in the euro zone, talks between the Greek government and the troika broke down in Athens, ahead of Thursday’s European Union summit.
Earlier in the day, a report showed that the ZEW index of German economic sentiment improved to minus 11.5 in October from September’s reading of minus 18.2. Economists had forecast a reading of minus 15.0 this month.
Separately, official data showed that consumer price inflation in the euro zone slowed to 2.6% in September, down from a preliminary estimate of 2.7%.
In the U.S., the Labor Department said consumer prices rose by 0.6% in September, above expectations for a 0.5% gain on the back of higher gasoline prices.
The greenback was lower against the pound, with GBP/USD rising 0.29% to 1.6118.
The pound remained under pressure after official data showed that the annualized rate of U.K. consumer inflation dropped to 2.2% in September, the lowest since November 2009, giving the Bank of England more leeway to ease monetary policy further.
Elsewhere, the greenback was higher against the yen, with USD/JPY up 0.36% to 78.92, but weakened against the Swiss franc, with USD/CHF falling 0.61% to 0.9274.
The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD up 0.48% to trade at 0.9854, AUD/USD rising 0.15% to 1.0267 and NZD/USD down 0.61% to 0.8135.
The Canadian dollar remained under pressure after Bank of Canada Governor Mark Carney adopted a more dovish stance on interest rates in a speech on Monday.
Meanwhile, official data showed that Canadian manufacturing sales rose 1.5% in August, compared to 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 0.35% to 79.49.
Also Tuesday, official data showed that industrial production in the U.S. rose 0.4% in September, above expectations for a 0.2% increase, after dropping by an upwardly revised 1.4% in August.