The US dollar was softer on Wednesday after new inflation data bolstered the likelihood US interest rates will not be raised anytime soon, while sterling rose ahead of a vote by Britain's parliament on a proposal that would rule out a "no deal" exit from the EU. US producer prices barely rose in February, the US Labour Department reported on Wednesday, resulting in the smallest annual increase in more than 1-1/2 years. This is the latest sign of benign inflation, supporting the Federal Reserve's wait-and-see approach to further interest rate hikes this year.
US economic data from February has been weaker than expected: Employers added just 20,000 jobs last month, a 94 percent decline from January, and both consumer and producer prices reported this week have modestly surprised to the downside. The dollar was last down 0.22 percent against the euro, at $1.131.
The US dollar index, which measures the greenback against a basket of six rival currencies, was 0.22 percent lower at 96.725. Still the data was not dramatic enough to create a trend in either direction, said Shahab Jalinoos, global head of foreign exchange strategy at Credit Suisse. "You're not really getting the kind of economic divergence story that you might need to get more movement in the foreign exchange market."
The pound edged up after turbulence following the defeat of May's European Union exit deal on Tuesday, but investors were loath to make definitive calls without more information about the course forward. The pound was last up 0.01 percent at $1.318 after a rollercoaster ride this week in which its price has moved within a range of 3-1/2 cents against the dollar. Elsewhere on Wednesday, the Australian dollar skidded lower after a consumer confidence gauge triggered fresh concerns about a slowing economy.
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