US Dollar rockets to 2021-peak as boiling inflation data muscles up rate-hike bets

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US Dollar rockets to 2021-peak as boiling inflation data muscles up rate-hike bets

On Wednesday, the US Dollar Index (DXY) measured against a basket of six major currencies on an average skyrocketed 0.97 per cent to 94.83, hitting the strongest in 2021, as a scorching surge in inflation indicators had ramped up bets that the US Fed might foster a hawkish monetary policy aimed at addressing a latest leg of sweltering inflation-surge which has reportedly been eating up a lion’s share of Americans’ wages despite a cascade of pay-hikes.

In point of fact, in the day’s robust gains in US Dollar Index (DXY) was largely sparked by a worrisome uptick in US CPI last month, as US Labor Department data had unveiled earlier in the day that US Consumer Prices Index (CPI), the average change in prices of consumers’ goods and services on a weighted basis, had picked up by the strongest pace since 1990 last month, spurring up investors’ bet of a probable shift in the US Fed’s current monetary policy.

US Dollar jumps to 2021-high as CPI data beefs up rate-hike bet

Citing statistics, in the day’s FX market wind-down, the bloc’s common currency euro, shared among 19 member states, took a tattering header of as much as 1.01 per cent to $1.1476 against the greenback, while British Pound pummeled 1.15 per cent to $1.3401.

Aside from that, the safe-haven Japanese Yen shed 0.91 per cent to 113.90 yen per Dollar, while Swiss Franc, another safe-haven asset demands of which usually steps up during geo-political turbulences, lost 0.77 per cent to $0.9180.

Besides, commodity-linked loonies such as Aussies, Kiwis and Canadian Dollar, dwindled as much as 0.70 per cent, 0.98 per cent and 0.47 per cent respectively to $0.7326, $0.7057 and $1.2495 against their American peers.

Meanwhile, citing growing market bets on a hawkish Fed despite the US Federal Reserve’s reiterations regarding a ludicrous leeway to a higher inflation, the National Australia Bank’s head of FX strategy, Ray Attrill said, “The market is still conferring a degree of credibility on the Fed, that they are not going to allow very high inflation to persist indefinitely.

If the dollar index moves higher than 95, investors might start to get out of the way”.