Dollar Soars on Inflation Hike Expectations
The US dollar surged to a 10-day high after Friday's inflation report confirmed expectations of a Federal Reserve rate hike this week. The Fed meets on Thursday APAC time, and markets see an 88% chance of a hike according to Bloomberg pricing.
US headline annual inflation was reported at 3.4%, while core inflation came in at 2.4%. The greenback's biggest gains were in Europe, with USD/CHF up 0.5%, while EUR/USD fell 0.1%. GBP/USD was unchanged, but the Aussie and kiwi were stronger, with AUD/USD up 0.2% and NZD/USD up 0.3%.
In Asia, USD/JPY fell 0.5%, bucking the stronger US dollar trend as the pair extended its post-intervention sell-off. The Bank of England is also expected to hold rates at 3.75% on Thursday evening, weighing sticky UK inflation.