Dollar Strengthens Amid High U.S Inflation Reports

The US dollar gained a strong boost on Thursday morning in Asia and was recorded its highest levels for the year against the euro and the pound. However, the yen declined due to high inflation reports of the U.S.

The U.S dollar Index went up 0.07% to 94.905 by 11:50 pm ET. The AUD/USD currency pair slipped down to 0.7038 whereas the USD/JPY climbed up 0.07% to 113.98. The USD/CNY pair was seen edging up 0.27% to 6.4055. The euro also saw a downward slide by 1% to $1.1476 after U.S Inflation reports were released on Wednesday. According to the reports, the CPI grew almost 6.2% and 0.9% for the month of October.

Traders and investors strongly believe the rate hike by the Federal Reserve will keep inflation high along with U.S treasury yields surging. According to Ray Attril, Head of FX strategy at National Australia Bank, “The market is still conferring a degree of credibility on the Fed that they are not going to allow very high inflation to persist indefinitely. If the dollar index moves higher than 95, investors might start to get out of the way.”

He further said, “It’s quite a big level technically and if we can break up through that then there will be more people throwing in the towel.”