🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Dollar index has biggest daily pct gain since 2020 after unexpected rise U.S. consumer prices

Published 09/12/2022, 09:35 PM
Updated 09/13/2022, 04:46 PM
© Reuters. FILE PHOTO: U.S. One dollar banknotes are seen in front of displayed stock graph in this illustration taken, February 8, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
DX
-

By Caroline Valetkevitch

NEW YORK (Reuters) - The dollar rallied against the yen, euro and other currencies on Tuesday after stronger-than-expected U.S. inflation data boosted investor bets that the Federal Reserve will need to stay aggressive in raising interest rates.

The dollar index, which tracks the greenback against its peers, was up 1.5% at 109.85 in its biggest one-day percentage gain since March 2020. It was still below last week's two-decade peak of 110.79. The index turned positive after the data release.

The euro, pound and yen all weakened sharply. The euro was last down 1.5% versus the greenback at $0.9973, after hitting a nearly one-month high of $1.0198 in the previous session. The euro has traded below parity in 16 of the last 17 sessions.

According to the Labor Department report, U.S. consumer prices unexpectedly rose in August and underlying inflation picked up amid rising costs for rents and healthcare.

"The data was far stronger than expected. Particularly worrisome is the fact that core inflation came in almost double estimates," said Karl Schamotta, chief market strategist at Corpay in Toronto.

"This is going to put the idea of transitory inflation to bed for now and anchor U.S. yields and the dollar substantially higher. The key thing here is that we're now looking at near-certain odds on a 75-basis-point move next week."

After the report, interest-rate futures traders dumped any lingering bets on Fed policymakers slowing their rate hike pace when they meet next week. They piled into bets on a third straight 75 basis points hike that would lift the Fed's current 2.25% to 2.5% policy rate range to 3% to 3.25%, and rate contracts now also reflect about one-in-four odds of a surprise full-percentage-point increase at the Sept. 20-21 meeting.

The dollar had eased in recent sessions after its strong run higher, while the euro had been gaining in recent sessions following hawkish talk from the European Central Bank.

Against the yen, the dollar was last up 1.2% at 144.51. Earlier, the Japanese currency found support from comments from officials signaling the government could take steps to counter excessive yen weakness.

Sterling was down against the dollar as well. The pound was last down 1.6% at $1.1499. Earlier in the day, it rose to a two-week high after the British jobless rate dropped to its lowest level since 1974, while wages excluding bonuses rose by 5.2%, the highest rate since the three months to August 2021.

In cryptocurrencies, bitcoin last fell 9.48% to $20,277.00, while ether was down 6.8% at $1,600.

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

Currency bid prices at 4:08PM (2008 GMT)

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

Previous Change

Session

Dollar index

109.8500 108.2200 +1.53% 14.830% +109.8900 +107.6700

Euro/Dollar

$0.9973 $1.0122 -1.47% -12.27% +$1.0188 +$0.9970

Dollar/Yen

144.5050 142.8200 +1.19% +25.53% +144.6750 +141.6050

Euro/Yen

144.12 144.58 -0.32% +10.59% +145.0300 +144.0400

Dollar/Swiss

0.9616 0.9539 +0.83% +5.45% +0.9632 +0.9482

Sterling/Dollar

$1.1499 $1.1683 -1.56% -14.97% +$1.1738 +$1.1497

Dollar/Canadian

1.3167 1.2985 +1.41% +4.14% +1.3174 +1.2954

Aussie/Dollar

$0.6733 $0.6889 -2.26% -7.37% +$0.6916 +$0.6726

Euro/Swiss

0.9591 0.9652 -0.63% -7.50% +0.9677 +0.9585

Euro/Sterling

0.8671 0.8662 +0.10% +3.23% +0.8694 +0.8649

NZ

Dollar/Dollar $0.5992 $0.6137 -2.38% -12.47% +$0.6161 +$0.5987

Dollar/Norway

10.1080 9.8455 +2.71% +14.79% +10.1185 +9.8185

Euro/Norway

10.0824 9.9616 +1.21% +0.69% +10.0908 +9.9547

Dollar/Sweden

10.6915 10.4874 +0.61% +18.56% +10.6979 +10.4140

© Reuters. FILE PHOTO: U.S. One dollar banknotes are seen in front of displayed stock graph in this illustration taken, February 8, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

Euro/Sweden

10.6645 10.5996 +0.61% +4.21% +10.6708 +10.5995

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.