CPI Hits Another Four-Decade High USD rises

USD rises as CPI hits another four decade high, data shows the headline consumer inflation accelerated once again in June to the highest level since 1981,US consumer inflation hit the high of 41 years and beat the forecast, 9.1% in June against 8.6% one month earlier and expected increase to 8.8%.

The above data resulted in a clear jump of USD and then falling back 100 points. Trader’s speculation increases that the Fed should do more than what is already done and suppress inflation. As mentioned above after the report, markets priced in two more 75 point rate hikes, June’s hike was extraordinary.

EURUSD parity was also triggered in a reaction to the market initially. The single currency has managed to find the demand on these levels. The same goes for other currencies which are running dollar but successfully holding their ground.

Markets have jumped over their heads in their expectations from the Fed. Considering the Oil and Metal prices are falling for about a month now. Excluding the prices of food and energy, has slowed down for the past three months to 5.9% which was 6.5% in march.

It would not be of a surprise if the Fed, were to reassure the markets that it would proceed more measuredly so not to overcool the economy.