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Dollar Steady at 1-1/2-Week Highs after U.S. Inflation Data

2018-07-13 02:00    Investing

Dollar Steady at 1-1/2-Week Highs after U.S. Inflation Data Currency News

© Reuters. Dollar at 1-1/2-week highs after U.S. inflation data

The dollar was holding steady at one-and-a-half week highs against a currency basket on Thursday after data showing that U.S. inflation hit a six year high in June, underpinning expectations for two more rate hikes by the Federal Reserve this year.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was trading at 94.53 by 10:28 AM ET (14:28 GMT), having risen 0.67% on Wednesday.

Consumer inflation rose by an annualized 2.9% in June the Labor Department said. It was the highest rate since 2012.

On a monthly basis, prices rose by just 0.1%, slowing from 0.2% in May.

The figures came a day after data showing that U.S. producer prices posted the largest annual gain in six-and-a-half years in June, adding to signs of strength in the economy.

The reports indicated that even with the uncertainty arising around U.S. trade policy the Fed should remain on track to keep hiking interest rates this year.

Another report showed that initial jobless claims fell to a two month lows last week, as the labor market continues to tighten.

The dollar was trading near six-month highs against the yen, with USD/JPY last at 112.48, up 0.44% for the day.

The euro was little changed, with EUR/USD last at 1.1678, still well below Monday’s three-and-a-half week highs of 1.1790.

Earlier Thursday the minutes of the European Central Bank’s June meeting reiterated that interest will remain at current levels for as long as needed to raise inflation towards its target.

The ECB also warned that the increase in trade protectionism in recent months is hurting the European economy.

The warning came as the European Commission cut its growth forecast for Europe this year, blaming the rising threat of a trade war.

Meanwhile, the pound was fractionally higher, with GBP/USD at 1.3219.

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