SPX3,693.23-64.76 -1.72%
DIA295.86-4.66 -1.55%
IXIC10,867.93-198.88 -1.80%

FOREX-Dollar jumps after unexpected rise in U.S. consumer prices

FOREX-Dollar jumps after unexpected rise in U.S. consumer prices

Reuters · 09/13/2022 16:29
FOREX-Dollar jumps after unexpected rise in U.S. consumer prices

Updates to late New York trading

By Caroline Valetkevitch

- 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 to stay aggressive in raising interest rates.

The dollar index =USD, which tracks the greenback against its peers, was up 1.5% at 109.85 and hit its highest in a week, 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 weakened sharply. The euro was last down 1.5% versus the greenback at $0.9973, after hitting a 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 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."

After the report, interest-rate futures traders dumped any lingering bets on Fed policymakers slowing their rate hike pace when they meet 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 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 BTC=BTSP last fell 9.48% to $20,277.00, while ether ETH=BTSP was down 6.8% at $1,600.


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

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

Description

RIC

Last

U.S. Close
Previous
Session

Pct Change

YTD Pct
Change

High Bid

Low Bid

Dollar index

=USD

109.8500

108.2200

+1.53%

14.830%

+109.8900

+107.6700

Euro/Dollar

EUR=EBS

$0.9973

$1.0122

-1.47%

-12.27%

+$1.0188

+$0.9970

Dollar/Yen

JPY=EBS

144.5050

142.8200

+1.19%

+25.53%

+144.6750

+141.6050

Euro/Yen

EURJPY=

144.12

144.58

-0.32%

+10.59%

+145.0300

+144.0400

Dollar/Swiss

CHF=EBS

0.9616

0.9539

+0.83%

+5.45%

+0.9632

+0.9482

Sterling/Dollar

GBP=D3

$1.1499

$1.1683

-1.56%

-14.97%

+$1.1738

+$1.1497

Dollar/Canadian

CAD=D3

1.3167

1.2985

+1.41%

+4.14%

+1.3174

+1.2954

Aussie/Dollar

AUD=D3

$0.6733

$0.6889

-2.26%

-7.37%

+$0.6916

+$0.6726

Euro/Swiss

EURCHF=

0.9591

0.9652

-0.63%

-7.50%

+0.9677

+0.9585

Euro/Sterling

EURGBP=

0.8671

0.8662

+0.10%

+3.23%

+0.8694

+0.8649

NZ Dollar/Dollar

NZD=D3

$0.5992

$0.6137

-2.38%

-12.47%

+$0.6161

+$0.5987

Dollar/Norway

NOK=D3

10.1080

9.8455

+2.71%

+14.79%

+10.1185

+9.8185

Euro/Norway

EURNOK=

10.0824

9.9616

+1.21%

+0.69%

+10.0908

+9.9547

Dollar/Sweden

SEK=

10.6915

10.4874

+0.61%

+18.56%

+10.6979

+10.4140

Euro/Sweden

EURSEK=

10.6645

10.5996

+0.61%

+4.21%

+10.6708

+10.5995


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

((caroline.valetkevitch@thomsonreuters.com))