The dollar is losing ground against all its major rivals Tuesday afternoon. Continued concerns over global growth prospects continue to drive trading action, as economic data remains on the light side.

Investors are looking forward to 2 days of testimony by Fed Chair Janet Yellen before Congress tomorrow and Thursday. Yellen's statement and her responses to questions will be highly scrutinized for clues regarding future Fed rate hikes.

With a drop in inventories of durable goods more than offsetting an uptick in inventories of non-durable goods, the Commerce Department released a report on Tuesday showing a modest decrease in U.S. wholesale inventories in the month of December.

The report said wholesale inventories edged down by 0.1 percent in December after sliding by a revised 0.4 percent in November. The modest drop in inventories matched economist estimates.

The dollar dropped to over a 3-month low of $1.1337 against the Euro Tuesday, but has since rebounded to around $1.1295.

Germany's industrial production dropped unexpectedly in December, figures published by Destatis revealed Tuesday. Industrial production fell 1.2 percent from November, confounding expectations for an increase of 0.5 percent. This was the second consecutive fall in production. Output had decreased 0.1 percent in November.

German exports and imports set new highs in 2015, leading to the biggest ever trade surplus, preliminary data from Destatis showed Tuesday.

Exports rose 6.4 percent to EUR 1,195.8 billion and imports increased 4.2 percent to EUR 948.0 billion. The trade surplus grew to a record EUR 247.8 billion from the previous peak of EUR 213.6 billion.

The UK central bank should take action to tackle risks to financial stability sooner than later if lending starts to grow faster than national output, Bank of England Deputy Governor Jon Cunliffe said Tuesday.

"Given the vulnerability that already exists and the powerful drivers in the UK, particularly the housing market, if credit began again to grow faster than GDP, I would want to think about action to manage the financial stability risks sooner rather than later," Cunliffe said in a speech at a British Property Federation conference in London.

The household debt situation has become sustainable after a correction since the financial crisis, the policymaker noted.

"Household balance sheets, however, remain large by historic standards," Cunliffe said. "The position is sensitive to the unwinding, were it to occur, of some of the forces that pushed rates down over the past 40 years."

The buck slipped to a low of $1.4515 against the pound sterling Tuesday, but has since risen back to around $1.4450.

The U.K. merchandise trade deficit narrowed in December despite exports falling for the third straight month, suggesting that weak trade dragged economic growth at the end of 2015. The visible trade deficit decreased to GBP 9.9 billion from GBP 11.5 billion in November, preliminary data from the Office for National Statistics showed Tuesday.

Economists had forecast a shortfall of GBP 10.4 billion in December. A year ago, the deficit was GBP 13.5 billion.

Like-for-like sales in the United Kingdom spiked 2.6 percent on year in January, the British Retail Consortium said on Tuesday. That shattered forecasts for an increase of 0.3 percent following the 0.1 percent gain in December.

The greenback fell to over a 1-year low of Y114.184 against the Japanese Yen Tuesday, but has since bounced back to around Y114.900.

The M2 money stock in Japan was up 3.2 percent on year in January, the Bank of Japan said on Tuesday, worth 923.7 trillion yen. That topped forecasts for an increase of 0.3 percent following the 0.1 percent gain in December.

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