Dollar Elevated; Fed in Limelight on Inflation Surge

Dollar Elevated; Fed in Limelight on Inflation Surge

The dollar slightly higher in early European trade Thursday, with the U.S. currency supported by concerns of an earlier than expected Federal Reserve response to inflationary pressures in the wake of the worryingly large jump in U.S. consumer prices.

The U.S. Dollar Index Traces the greenback against a basket of six other currencies, was higher 0.1% at 90.775, around its highest level in a week.
EUR/USD traded 0.1% higher at 1.2075, after dropping around 0.6% the previous session.
GBP/USD was flat at 1.4052, and
USD/JPY Elevated 0.1% at 109.73, close to its strongest level in five weeks.
AUD/USD dropped 0.2% to 0.7712, while
NZD/USD climbed 0.1% to 0.7160, availing from additional plans to open the New Zealand economy.

The consumer price index strengthened 4.2% in April from a year ago, according to data released on Wednesday, well above consensus forecasts for 3.6% and climbing to its highest rate since the eve of the 2008 financial crisis.

Benchmark 10 year U.S. Treasury yields climbed to a five-week high above 1.70% overnight, enhancing the appeal of dollar-denominated assets, but have since trimmed back down to 1.685%.

Fed speakers have been very keen to make clear that they expected a bounce in prices as last year’s collapse in oil prices and a nascent economic recovery worked their way through the system, but they saw this increase as temporary.