Image: Reuters Berita 24 English - The dollar rose to a near four-week high against a basket of currencies on Friday, following the release ...
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| Image: Reuters |
Berita 24 English - The dollar rose to a near four-week high against a basket of currencies on Friday, following the release of data indicating that U.S. consumer prices accelerated in May, bolstering expectations that the Federal Reserve may have to continue to raise interest rates through September to combat inflation.
In the 12 months leading up to May, the CPI grew 8.6% after increasing 8.3% in April. Economists expected the annual CPI rate to peak in April.
The inflation report was released prior to the anticipated second rate hike of 50 basis points by the Fed on Wednesday. In July, it is anticipated that the U.S. central bank would increase its policy interest rate by another half percentage point. Since March, it has increased the overnight rate by 75 basis points.
"There is little sign that inflation has peaked," said John Doyle, vice president of dealing and trading at Monex USA. "Inflation is currently at a 40-year high."
"The anticipation that the Federal Reserve could find room to quicken rate hikes is causing stocks to decline further. The dollar is strengthening due to policy divergence and risk-averse trade "Doyle added.
The U.S. Dollar Currency Index, which measures the greenback relative to six other major currencies, rose 0.8% to 104.16, its best level since May 17 and within striking distance of 105.01, the 20-year high reached in mid-May.
The index rose over 2 percent for the week, its greatest weekly performance in six weeks.
The dollar rose 0.79 percent against the Swiss franc to 0.9881 francs on Friday after the U.S. Treasury Department said Switzerland continued to exceed its limits for probable currency manipulation under a 2015 U.S. trade law, but refrained from labelling Switzerland a currency manipulator.
As a result of the U.S. inflation statistics dampening investor risk appetite, the risk-sensitive Australian dollar traded 0.58 percent lower on the day.
As a result of Britain's bleak economic outlook, the pound plummeted 1.5 percent to $1.2315 and was expected to fall for a second consecutive week.
Bitcoin fell 3.7 percent to $28,984.33 as the largest digital currency by market value struggled to overcome a round of selling pressure that has pushed it below the $30,000 threshold in previous sessions.
