Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dollar climbs as U.S. inflation surge fuels rate hike speculation

EconomyNov 10, 2021 12:21PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

By Julien Ponthus and Sinéad Carew

LONDON/NEW YORK (Reuters) - The dollar index jumped sharply on Wednesday, with the euro hitting a 16-month low against the greenback, after U.S. consumer prices surged to their highest rate since 1990, fueling speculation that the Federal Reserve may raise interest rates sooner than expected.

The consumer price index rose 0.9% last month after gaining 0.4% in September and in the 12 months through October, the consumer price index accelerated 6.2%. the U.S. Labor Department said on Wednesday, while analysts expected on average the rise to be limited to 5.8%.

While the Fed last week restated its belief that the current inflation surge would be short-lived, many investors worry that underestimating price increases could prove to be a costly policy mistake.

At 1140 EDT (1640 GMT), the dollar index, which measures the greenback against six major currencies, was up 0.60% at 94.5230 after reaching a high of 94.609, just below its 13 and half-month high of 94.634 reached on Nov. 5.

While the Federal Reserve is already tapering its bond buying, rising inflation may force it to hike interest rates sooner than expected said Nancy Davis, founder of Quadratic Capital Management in Greenwich, Connecticut.

But "rate hikes might not be enough to reverse inflation because the sources of inflation involve supply chain bottlenecks and fiscal spending, which are two areas that the Federal Reserve doesn't control” she said.

“If inflation doesn't subside, the Federal Reserve may need to taper at a more substantial rate and hike interest rates, which could hurt stocks and bonds,” said Davis.

Against Japan's yen the greenback was last up 0.85% to 113.86 yen after touching a session high of 113.940. On Tuesday the dollar had hit a month-low against the yen.

Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York said the "pretty shocking" inflation data including sharp housing price increases suggest that high consumer prices are "not likely to prove transitory."

The euro was last down 0.61% at $1.1523 after earlier touching $1.15115, its lowest level since July 21, 2020.

Hammered last week after the Bank of England's surprise decision to keep rates unchanged, sterling was last down 0.59% at $1.3482, but still holding above Friday's more than one-month low of $1.3425.

The Australian dollar was down 0.24% against the greenback at $0.7363 after earlier hitting $0.7341, its lowest level since Oct. 13. The New Zealand dollar was down 0.55% against the U.S. dollar at $0.7091.

"What do these numbers say? Simply that inflation is going to be long-lasting and structural inflation has picked up speed," said Peter Cardillo, chief market economist at Spartan Capital Securities In New York.

"The bottom line is that this is going to be a real challenge for the Fed in the coming months and suggests that inflation has not peaked," he added.

Data had also shown on Tuesday that U.S. producer prices increased solidly in October, driven by surging costs for gasoline and motor vehicle retailing, suggesting that high inflation could persist.

In cryptocurrencies, bitcoin jumped to an all-time high of $69,000.00 after the U.S. inflation data and was last up 2.5% at $68,632.87.

========================================================

Currency bid prices at 11:40AM (1640 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 94.5230 93.9720 +0.60% 5.048% +94.6090 +93.9620

Euro/Dollar $1.1523 $1.1596 -0.61% -5.68% +$1.1595 +$1.1512

Dollar/Yen 113.8600 112.8800 +0.85% +10.18% +113.9400 +112.7800

Euro/Yen 131.21 130.87 +0.26% +3.38% +131.4100 +130.6600

Dollar/Swiss 0.9159 0.9112 +0.53% +3.54% +0.9168 +0.9110

Sterling/Dollar $1.3482 $1.3560 -0.59% -1.33% +$1.3565 +$1.3469

Dollar/Canadian 1.2439 1.2436 +0.03% -2.31% +1.2458 +1.2387

Aussie/Dollar $0.7363 $0.7380 -0.24% -4.30% +$0.7393 +$0.7341

Euro/Swiss 1.0553 1.0560 -0.07% -2.35% +1.0571 +1.0547

Euro/Sterling 0.8544 0.8551 -0.08% -4.40% +0.8560 +0.8532

NZ $0.7091 $0.7130 -0.55% -1.27% +$0.7132 +$0.7077

Dollar/Dollar

Dollar/Norway 8.5895 8.5025 +0.93% -0.06% +8.6000 +8.5215

Euro/Norway 9.8995 9.8640 +0.36% -5.43% +9.9080 +9.8519

Dollar/Sweden 8.6668 8.5735 +0.54% +5.74% +8.6705 +8.5738

Euro/Sweden 9.9875 9.9334 +0.54% -0.88% +9.9883 +9.9400

Dollar climbs as U.S. inflation surge fuels rate hike speculation
 

Related Articles

Cuban peso in free fall against the dollar
Cuban peso in free fall against the dollar By Reuters - Jan 26, 2022 1

By Marc Frank HAVANA (Reuters) - The Cuban peso was trading at nearly 100 to the dollar on the informal market Tuesday, according to a trader and online trackers, a depreciation...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (6)
Dee Morris
Dee Morris Nov 10, 2021 3:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York and the other contributor should have their stick transactions tracked. No rate hike due to the UNEMPLOYMENT RATE- Again, some person started a rumor to make the market well-off in the afternoon. Just think, after the report this morning did any see a well-off. Did the Feds say,"Oh, inflation will cause us to lie about what we stated last week. CPI rose- Big Deal, Unemployment filings in the RED-Very important- Today is Stock buy-back opportunities for the wallstreet manipulators. One day "Fact Checking" and "Market Stock Buying/Selling" will occur. Tomorrow we will see a buying surge occur due to a statement from someone important stating that today's news was wrong.
Evan Ault
Evan Ault Nov 10, 2021 2:52PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hike rates and save the dollar, or don't and save the economy... sacrificing growth and jobs in the name of the dollar would not be a well received thing in the court of public opinion... IMHO. they will let inflation run for a LONG time before you see any rate hikes.
Vincenzo Tilotta
Vincenzo Tilotta Nov 10, 2021 2:52PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I agree, next rate hike will be tiny tiny and around the year 2027
Casador Del Oso
Casador Del Oso Nov 10, 2021 12:35PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Say goodbye to the good times in the housing market once interest rates go up. Look out below, Joe.
Richard Scheel
Richard Scheel Nov 10, 2021 10:04AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Who is John Galt?
Vlad Lozovskiy
Vlad Lozovskiy Nov 10, 2021 9:55AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
But but but Ellen said 2 months ago inflation is under control, and will not happen!!!
Kevin Avila
Kevin Avila Nov 09, 2021 9:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
No rate hike= “Let them eat cake!”
Mir Chang
Mir Chang Nov 09, 2021 9:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Another dovish pick would drop gdp yty.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email