Dollar Scores Gains Over Major Rivals After Inflation Data
(RTTNews) - The U.S. dollar rose sharply against most of its major counterparts on Tuesday after data from the Labor department showed U.S. consumer inflation rose unexpectedly in the month of August, raising expectations that the Fed will once again hike interest rate by 75 bps next week.
Data from the U.S. Labor Department showed the consumer price index inched up by 0.1% in August after coming in unchanged in July. Economists had expected consumer prices to edge down by 0.1%.
Compared to the same month a year ago, consumer prices were up by 8.3% in August, reflecting a slowdown from the 8.5% spike in July. However, economists had expected the annual rate of growth to slow to 8.1%.
Meanwhile, the annual rate of growth by core consumer prices accelerated to 6.3% in August from 5.9% in July. The annual rate of growth was expected to rise to 6.1%.
CME Group's FedWatch Tool is currently indicating a 78% chance of a 75 basis point rate hike and a 22% percent chance of a 100 basis point rate hike.
The dollar index, which was down at 107.68 in the European session, rallied after U.S. inflation data, and rose to 109.89 later on in the session, gaining 1.43%.
Against the Euro, the dollar firmed to 0.9973 from 1.0122, gaining nearly 1.5%.
The dollar is up sharply against Pound Sterling, strengthening to $1.1497 from $1.1683 a unit of the British currency.
Against the Japanese currency, the dollar firmed to 144.50 yen from 142.84, gaining nearly 1.2%.
The dollar strengthened to 0.6734 against the Aussie from 0.6888. The Swiss franc weakened to 0.9612 a dollar from 0.9540, while the Loonie slid to C$1.3175 a dollar, easing from C$1.2986.
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