2019.03.1217:00:00UTC+00Dollar Loses Ground Against Most Major Currencies

The U.S. dollar was weak against the Japanese Yen and the Euro on Tuesday, even as it stayed firm against the British Pound.

Although the U.S. consumer price index rose in February, rising for the first time since November, the pace of increase was very modest and in line with expectations. The slow pace of rise in inflation justified the Federal Reserve's latest stance on interest rates.

The dollar index dropped to a low of 96.86 before edging up to 96.91 and then to around 96.95, still down by about 0.2% from previous close.

The dollar weakened to 1.1308 against the Euro, before regaining some ground. Still, at $1.1295, was down more than 0.4% from Monday's close.

Against the Yen, the dollar was up marginally, with a unit buying 111.29 yen.

The British Pound Sterling tumbled after British Prime Minister Theresa May's Brexit plan was soundly defeated in Parliament today. The Sterling dropped to a low of 1.2960 against the dollar, before edging up to 1.3081.

May's Brexit deal has been defeated by a massive 149 votes. The government would not commit to allowing the House of Commons a free vote on a no deal Brexit on Wednesday, May said.

In the event of it being rejected by the MPs, there will be a vote on Thursday to decide whether the UK should request an extension to Brexit.

Earlier in the day, the pound erased its early gains, after Attorney General Geoffrey Cox admitted that the legal risk of the UK being locked to EU rules after Brexit "remains unchanged" despite recent changes struck in deal last night.

Speaking to the House of Commons, Cox said that the legal risk of the UK being trapped in the backstop remained unchanged and the new concessions secured from the EU would only 'reduce' this risk.

"The legal risk remains unchanged. The UK would have no internationally lawful means of exiting the Protocol's arrangements, save by agreement," Cox told MPs.

"The question for the House is whether, in the light of these improvements, as a political judgement, the House should now enter into those arrangements," he advised.

Against the Swiss franc, the dollar was losing about 0.3% and against the Loonie, it was down 0.26%, while staying firm against the Aussie, gaining 0.16%.

According to the report released by the Labor Department Tuesday morning, consumer prices showed a modest increase in the month of February, after reporting no change in consumer prices over the past few months.

The report said the consumer price index rose by 0.2% in February after coming in unchanged for three straight months. The uptick in consumer prices matched economist estimates.

Excluding food and energy prices, core consumer prices inched up by 0.1% in the month, after rising by 0.2% in January. Economists had expected another 0.2% increase in prices.

The slower pace of consumer price growth justifies the Federal Reserve supporting the real economy by being patient and leaving interest rates on hold for a potentially extended period, said Paul Ashworth, Chief U.S. Economist at Capital Economics.

On Monday, the Federal Reserve chairman Jerome Powell said that the U.S. central bank is in no rush to adjust borrowing costs, given muted inflation pressures and a slowing global economy.