The US dollar experienced a significant rise during trading on Wednesday, following the release of the consumer price index inflation data in the United States, after being traded stable without much change earlier in the session and prior to the data release.
The Dollar Now In terms of trading, the dollar index – which measures the performance of the US currency against a basket of 6 other major currencies – rose by 0.53% to record 108.5 points, marking its highest level in a week.
Inflation Data Fuels the Dollar The inflation data released today in the United States showed that the consumer price index grew at the fastest pace in 7 months, as the readings exceeded market expectations, with overall inflation recorded at 3%, surpassing market expectations of 2.9%. Meanwhile, core inflation stood at 3.3%, exceeding market expectations that had anticipated a slowdown from 3.2% to 3.1%.
The higher-than-expected inflation data, which reached its highest level since June of last year, strengthened expectations that the US Federal Reserve may have to keep interest rates at current levels for a longer time than previously anticipated.
Markets are now pricing in the first interest rate cut at the Federal Reserve's meeting in October. However, the pricing of the cut remains relatively low, with the market pricing in a 41.3% probability for the October meeting.
