The dollar had a rare strong day versus other major currencies on Tuesday as stocks headed lower on Wall Street, fueling a modest bout of risk aversion.
After hitting yearly lows versus a number of higher-yielding counterparts, the dollar steadied as traders sifted through a pile of economic data and a key interest rate decision from north of the border.
The Bank of Canada maintained its key interest rate at 0.25 percent, as expected.
Here in the US, producer prices dropped more than expected in September, the latest government data showed Tuesday. A slide in energy prices led the retreat, but core prices edged lower as well.
The figures indicate that wholesale inflation remains under control, and supports the Federal Reserve's stance that weak economic conditions are continuing to weigh on prices, despite some signs of an economic recovery.
Meanwhile, the Commerce Department released a report on Tuesday showing a modest increase in housing starts in the month of September. However, starts came in well below economist estimates due in part to a downward revision to the previous month's data.
The report showed that housing starts edged up 0.5 percent to an annual rate of 590,000 in September from the revised August estimate of 587,000.
The dollar managed to improve by almost a penny after hitting a yearly low of 1.4993 versus the euro. Still, the buck has been in steep decline on long-term basis, dropping almost 25 cents since March.
Against the loonie, the dollar rose to C$1.0500, a big jump from a yearly low near C$1.0200.
Policy makers in Ottawa said that Canada's overnight target rate can be expected to remain at 0.25 percent until the end of the second quarter of 2010, given the overall risks to inflation are tilted slightly to the downside.
The dollar was steady versus the yen, holding above the 90 mark. Two weeks ago, the dollar tested a 1995 low of 87.08, slipping below 88.
Against the sterling, the dollar slipped to a 6-week low of 1.6488 before improving by a cent.
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