The greenback clawed back losses against the euro and the yen amid trader concern on rising inflation
The consumer price index rose the highest since 1990
Data released on Wednesday showed that US consumer prices spiked the most in three decades this October, with year-over-year inflation of 6.2%. It’s the biggest annual spike since 1990.
Consumer prices were higher in October by 0.9%, compared to 0.4% in September and 0.3% in August.
BREAKING: U.S. inflation was up 6.2% in October over a year ago. That’s the highest inflation in 31 years.
Inflation was up 0.9% in Oct. alone, a much higher increase than 0.4% in Sept. and 0.3% in August.
Prices are rising for food, energy, shelter, used cars and new cars.
— Heather Long (@byHeatherLong) November 10, 2021
All eyes are once again on the Federal Reserve, which could swing into action and lift interest rates if the next data comes out hotter-than-expected again.
Other central banks, led by Bank of England and the European Central Bank (ECB) may ponder similar moves if price data from the regions mirror that of the US.
UK growth data is slated for release later on Thursday.
Dollar hits 2021 highs as the euro slips
The dollar rose against the euro and the sterling during early sessions on Thursday as traders’ focus shifted to Fed’s next move. The dollar index rose to 95.002, its highest level in 2021.
Fresh upsides for the dollar might hinge on the next moves that the Fed is likely to adopt. If the Fed holds its recent decision on tapering, the index will turn negative and most likely positive if interest rates hike is hastened.
The euro has slipped in early markets on Thursday, with trader confidence dented amid continued lagging from the European Central Bank. The euro slumped 1.1465 against the dollar, hitting its lowest level in over a year. With inflation fears likely to spark further selling, the currency could seek primary support near 1.12.
The Sterling, which has ticked lower to 1.3392, has also lost against the dollar. It is refreshing lows last seen in late December 2020. A similar outlook was witnessed with the Japanese yen. After seeing gains against the dollar this past week, the yen dropped to 114.15 amid a resurgent greenback.