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FOREX-Dollar rallies against euro, yen after surprisingly firm U.S. consumer prices

FOREX-Dollar rallies against euro, yen after surprisingly firm U.S. consumer prices

Reuters · 09/13/2022 10:08
FOREX-Dollar rallies against euro, yen after surprisingly firm U.S. consumer prices

Updates to after CPI data, early New York trading

By Caroline Valetkevitch and Samuel Indyk

- The dollar jumped against the yen, euro and other currencies on Tuesday after stronger-than-expected U.S. inflation data, which suggested the Federal Reserve may to stay aggressive in raising interest rates.

The dollar index =USD, which tracks the greenback against six peers, was up 1.1% at 109.39, heading back toward last week's two-decade peak of 110.79. The index turned positive after the data release.

The euro EUR=EBS, pound GBP=D3 and yen JPY=EBS all declined, with the euro last down 1% versus the greenback to $1.0016, after hitting a one-month high of $1.0198 in the previous session.

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 and anchor U.S. yields and the dollar substantially higher. The key thing here is that we're looking at -certain odds on a 75-basis-point move week."

Following the report, a price rise in interest-rate futures contracts reflected -certainty that the Fed will at least deliver a 75-basis-point rate hike week, with a small chance of an even bigger increase.

The dollar had eased in recent sessions after its strong run higher.

Against the yen, the dollar was up 0.9% at 144.095. Earlier, the Japanese currency found support from comments from officials signaling the government could take steps to counter excessive yen weakness.

The euro had been gaining in recent sessions following hawkish from the European Central Bank. Last week, five sources close to the matter said Europe's benchmark rate could rise to 2% or beyond to tame inflation.

Sterling was down against the dollar as well. The pound was last down 1.2% at $1.1544. 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.

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

Currency bid prices at 9:37AM (1337 GMT)

Description

RIC

Last

U.S. Close
Previous
Session

Pct Change

YTD Pct
Change

High Bid

Low Bid

Dollar index

=USD

109.3900

108.2200

+1.10%

14.349%

+109.5600

+107.6700

Euro/Dollar

EUR=EBS

$1.0016

$1.0122

-1.04%

+0.00%

+$1.0188

+$1.0005

Dollar/Yen

JPY=EBS

144.0950

142.8200

+0.89%

+0.00%

+144.6750

+141.6050

Euro/Yen

EURJPY=

144.32

144.58

-0.18%

+0.00%

+145.0300

+144.1500

Dollar/Swiss

CHF=EBS

0.9614

0.9539

+0.79%

+0.00%

+0.9632

+0.9482

Sterling/Dollar

GBP=D3

$1.1544

$1.1683

-1.17%

+0.00%

+$1.1738

+$1.1532

Dollar/Canadian

CAD=D3

1.3082

1.2985

+0.76%

+0.00%

+1.3092

+1.2954

Aussie/Dollar

AUD=D3

$0.6796

$0.6889

-1.31%

+0.00%

+$0.6916

+$0.6779

Euro/Swiss

EURCHF=

0.9628

0.9652

-0.25%

+0.00%

+0.9677

+0.9620

Euro/Sterling

EURGBP=

0.8674

0.8662

+0.14%

+3.26%

+0.8694

+0.8649

NZ Dollar/Dollar

NZD=D3

$0.6042

$0.6137

-1.53%

+0.00%

+$0.6161

+$0.6024

Dollar/Norway

NOK=D3

10.0145

9.8455

+1.75%

+0.00%

+10.0515

+9.8185

Euro/Norway

EURNOK=

10.0255

9.9616

+0.64%

+0.13%

+10.0626

+9.9547

Dollar/Sweden

SEK=

10.6191

10.4874

+0.31%

+17.76%

+10.6371

+10.4140

Euro/Sweden

EURSEK=

10.6322

10.5996

+0.31%

+3.89%

+10.6459

+10.5995


(Reporting by Caroline Valetkevitch in New York and Samuel Indyk in London, additional reporting by Rae Wee in Singapore; Editing by Ana Nicolaci da Costa, Chizu Nomiyama and Jonathan Oatis)

((caroline.valetkevitch@thomsonreuters.com))