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

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NEW YORK/LONDON — 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 need to

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stay aggressive in raising interest rates.

The dollar index, 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, pound and yen all declined, with the euro last down 1% versus

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the greenback to $1.0016, after hitting a nearly 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 now and anchor U.S. yields and the

dollar substantially higher. The key thing here is that we’re now looking at near-certain odds on a

75-basis-point move next week.”

Following the report, a price rise in interest-rate futures contracts reflected near-certainty that the

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Fed will at least deliver a 75-basis-point rate hike next week, with a small chance of an even bigger


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 noises 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


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

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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 Pct Change YTD Pct High Bid Low Bid

Previous Change


Dollar index 109.3900 108.2200 +1.10% 14.349% +109.5600 +107.6700

Euro/Dollar $1.0016 $1.0122 -1.04% +0.00% +$1.0188 +$1.0005

Dollar/Yen 144.0950 142.8200 +0.89% +0.00% +144.6750 +141.6050

Euro/Yen 144.32 144.58 -0.18% +0.00% +145.0300 +144.1500

Dollar/Swiss 0.9614 0.9539 +0.79% +0.00% +0.9632 +0.9482

Sterling/Dollar $1.1544 $1.1683 -1.17% +0.00% +$1.1738 +$1.1532

Dollar/Canadian 1.3082 1.2985 +0.76% +0.00% +1.3092 +1.2954

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Aussie/Dollar $0.6796 $0.6889 -1.31% +0.00% +$0.6916 +$0.6779

Euro/Swiss 0.9628 0.9652 -0.25% +0.00% +0.9677 +0.9620

Euro/Sterling 0.8674 0.8662 +0.14% +3.26% +0.8694 +0.8649

NZ $0.6042 $0.6137 -1.53% +0.00% +$0.6161 +$0.6024


Dollar/Norway 10.0145 9.8455 +1.75% +0.00% +10.0515 +9.8185

Euro/Norway 10.0255 9.9616 +0.64% +0.13% +10.0626 +9.9547

Dollar/Sweden 10.6191 10.4874 +0.31% +17.76% +10.6371 +10.4140

Euro/Sweden 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)



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