Dollar Rises to Highest in Three Weeks After US CPI
A dollar gauge climbed to the highest since June 23 as US inflation data didn’t provide fodder for an imminent interest-rate cut by the Federal Reserve. All currencies in the Group of 10 weakened against the greenback with the yen lagging behind most peers.
The Bloomberg Dollar Spot Index rose 0.4%, for fourth day of gains.
Theconsumer price index, excluding the often volatile food and energy categories, increased 0.2% from May, according to Bureau of Labor Statistics data out Tuesday.
On an annual basis, it advanced 2.9%.
“Today’s inflation print showed that tariffs are having an impact on core goods and that impact is likely to get larger from here, limiting how much the Fed can cut and boosting the dollar,” said Skylar Montgomery Koning, a currency strategist at Barclays.
“It wasn’t the soft print that doves were looking for,” said Helen Given, a foreign-exchange trader at Monex Inc. “It looks like markets are seeing today’s CPI as the first in what could be a series of above-target inflation readings should the administration’s Aug. 1 deadline hold”.
The Fed staying on sidelines “till at least September” with the noise form trade policy will be supportive for the dollar, according to Aroop Chatterjee, a strategist at Wells Fargo.
“Markets are becoming more confident that the Fed has a better chance of staying on hold than cutting rates in September,” said Ed Al-Hussainy, global rates strategist at Columbia Threadneedle Investment.
USD/JPY rose 0.8% to 148.89, highest since April 3.
One-week risk reversal on USD/JPY is poised to close in positive territory for the first time since 2022, a sign that investors are expecting more yen depreciation in the coming week.
EUR/USD fell 0.5% to 1.1601.
Wells Fargo recommends traders short the euro versus the Canadian dollar as the pair trades near multi-decade highs and as US President Donald Trump threatens Europe with higher tariffs. Strategists at the bank recommend selling EUR/CAD, targeting a move to 1.5410 over the next month.
EUR/CAD declined 0.4% to 1.5918.
USD/CAD climbed 0.1% to 1.3720.
Canadian consumer prices accelerated for the first time in four months and underlying price pressures firmed, likely keeping the Bank of Canada from cutting rates this month.
Source: Bloomberg
