Author: Chibuike Oguh
NEW YORK (Reuters) – The U.S. dollar strengthened near a seven-month high against major currencies on Wednesday after data showed U.S. inflation for October rose in line with expectations, suggesting the Federal Reserve will continue to cut interest rates.
The dollar rose to its highest level since April 16, fueled by Donald Trump’s victory in last week’s U.S. presidential election, which raised expectations that his novel administration would introduce potentially inflationary tariffs and other measures.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.33% to 106.34 to settle at 106.50.
Labor Department data released Wednesday showed the U.S. consumer price index rose 0.2% for the fourth straight month, in line with economists’ expectations, on higher shelter costs such as rents. In the 12 months to October, CPI increased by 2.6%.
U.S. Treasury yields fell following the inflation data, with the benchmark U.S. 10-year bond yield falling 2.3 basis points to 4.41%.
“So these numbers were certainly of great concern because it was just one new brick in this kind of wall of worry; so there has been little growth and yields are lower,” said Marvin Loh, senior director of global market strategist at Stanowa Street (NYSE:) in Boston.
“It just shows how on edge the market is banking on the Fed, on inflation, and certainly on this nebulous Trump trade. The dollar appears to be one of the cleanest and easiest ways to play the Trump trade, as does bitcoin, it seems.”
surpassed the $90,000 level for the first time, fueled by euphoria after Trump’s election victory and expectations that his administration would be favorable to cryptocurrencies. Bitcoin gained 3.63% to $91,519.00. rose 0.46% to $3,295.60.
Wholesale inflation in Japan accelerated at the fastest annual pace in more than a year in October, complicating the Bank of Japan’s decision on when to raise interest rates.
The yen broke above 155 per dollar, the weakest level for the Japanese currency since slow July. The price was last at 155.01 yen per dollar.
The euro continued to fall amid expectations of potential Trump tariffs. The euro () fell 0.43% to $1.0577.
The dollar weakened by 0.02% to 7.241 against offshore.
“The euro must face the enormous influence of the Trump administration and uncertainty about how well China fits into the new world order,” Loh added.
