USD Rises After Higher CPI Supports Fed

The dollar rose to the highest in eight months versus the euro as an increase in short-term U.S. Treasury yields signaled mounting speculation that Federal Reserve Chair Janet Yellen will need to raise interest rates.

The greenback extended gains after U.S. consumer prices rose in June, adding pressure on the Fed to tighten policy sooner, while the European Central Bank has introduced unprecedented stimulus. Indonesia’s rupiah weakened from a two-month high as a presidential candidate rejected the election as undemocratic. Russia’s ruble headed for the strongest gain in a month.

“That’s not a data response — that is a market that’s looking to sell euro,” Greg Anderson, head of global foreign-exchange strategy at Bank of Montreal, said by phone from New York. The U.S. data was “not much of a surprise, just tiny bit soft on the core.”

The dollar appreciated 0.3 percent to 1.3480 per euro at 8:47 a.m. New York time, after touching $1.3459, the strongest level since Nov. 21. The euro fell 0.3 percent to 136.73 yen. The Japanese currency was little changed at 101.43 per dollar.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, rose 0.1 percent to 1,010.45 after advancing to 1,011.76, the highest level since June 18.

via SOURCE

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza