USD Gains as Global Inflation Picks Up Pace

The US dollar made gains on Thursday as the latest inflation data revealed higher-than-expected prices in the country, echoing the trend of rising global inflation. The personal consumption expenditures (PCE) inflation reading came in at 3.7%, surpassing forecasts of 3.6%. The core measure also exceeded expectations with a rate of 3.6%.

The US dollar extended its rebound from three-month lows, appreciating against most major currencies. The New Zealand dollar and British pound both dropped by 0.5% and 0.4%, respectively, while the Aussie bucked the trend to rise slightly. Australia's inflation data also revealed higher-than-expected prices, with headline inflation easing to 3.5% from 3.8%. Underlying inflation remained steady at 3.6%.

Market sentiment improved as tensions in the Middle East eased, supporting demand for risk-sensitive currencies and assets. Iran reported constructive diplomatic talks with Pakistan, while reports suggested a US-Iran ceasefire agreement had been reached. The Australian dollar continued to show strength, trading at over three-month highs against several major currencies.