With traders reacting to the Labor Department's highly anticipated consumer price inflation report, the U.S. dollar has shown a notable move to the downside on Wednesday.

The U.S. dollar index is currently falling 0.68 points or 0.7 percent to 94.94 dropping to its lowest levels in two months.

The greenback is trading at 114.53 yen compared to the 115.30 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1449 compared to yesterday's $1.1367.

While the Labor Department report showed the annual rate of consumer price growth once again reached the highest level in almost 40 years, traders seemed relieved the acceleration was not even more significant.

The report showed the annual rate of consumer price growth accelerated to 7.0 percent in December from 6.8 percent in November, showing the biggest yearly jump since June of 1982.

Core consumer prices, which exclude food and energy prices, were up by 5.5 percent year-over-year in December compared to the 4.9 percent spike in November. The annual growth reflected the biggest surge since February of 1991.

The continued acceleration in the annual rate of consumer price growth came as prices increased by slightly more than expected on a monthly basis, although the pace of growth slowed from November.

The Labor Department said its consumer price index rose by 0.5 percent in December following a 0.8 percent advance in November. Economists had expected consumer prices to rise by 0.4 percent.

Core consumer prices increased by 0.6 percent in December after climbing by 0.5 percent in November. Core prices were expected to advance by 0.5 percent.

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