US Dollar Surges on Slightly Higher Inflation Expectations

The US dollar rose on Wednesday after a round of economic data from the Commerce Department. The Personal Consumption Expenditures Price Index increased 3.7% in the 12 months through July, which is slightly higher than the 3.6% estimate from economists polled by Reuters.

This slight increase in inflation expectations led to a 40.1% chance of an interest rate hike at the Federal Reserve's September meeting, according to CME FedWatch. The dollar index rose 0.21% to 99.12 and was on pace for its biggest daily gain since August 6.

European Central Bank board member Isabel Schnabel said that interest rates must rise further due to the conflict in the Middle East and the strong euro zone economy posing upside risks to inflation. The Canadian dollar weakened versus the greenback, while the Japanese yen and sterling also declined.