The dollar reached its strongest gain since September following hotter-than-forecast US inflation data. The Bloomberg Dollar Spot Index rose 0.6% after CPI topped estimates for a third consecutive month. Federal Reserve Governor Christopher Waller backed a rate hike and suggested a half-percentage-point increase if inflation continues.
The dollar strengthened against major currencies including the Norwegian krone, Australian dollar, Swedish krona, and yen, which all fell more than 1%. Consumer prices excluding food and energy rose 0.3% in October, with overall price growth at 0.4%. Traders now price in a 50-basis-point hike as a real possibility, with expectations shifting from a quarter-point increase to a half-point move in December.
Dallas Fed President Lorie Logan also supported additional rate hikes. The dollar is up 0.5% so far this month, emerging from the US midterm elections.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing