Forex – Dollar Hits Day’s Highs as U.S. Inflation Rises

© Reuters. Dollar hits day’s highs as U.S. inflation rises – The dollar rose to the day’s highs against a basket of the other major currencies on Wednesday after data showing that U.S. inflation rose more strongly than expected in January.

The annual rate of inflation rose to in January and to on a core basis the Department of Labor said.

Consumer prices rose from a month earlier and to on a core basis.

The inflation data had been hotly anticipated after fears over rising price pressures and thus a faster rate of interest rate increases triggered the initial selloff in global equity markets two weeks ago.

turned sharply lower as the inflation data rekindled fears that the Federal Reserve than expected, while European markets lost their early gains.

At the same time, a separate report showed that U.S. retail sales fell in January after a 0.4% gain in December.

The , which measures the greenback’s strength against a basket of six major currencies, was up 0.37% to 89.93 by 08:40 AM ET (13:40 GMT).

The U.S. currency attracted safe haven demand during the stock market downturn seen earlier this month, although it had fallen to a three-year low in January.

The euro fell to the day’s lows against the dollar, with losing 0.46% to 1.2293 after earlier rising to a one-week high of 1.2393.

The dollar remained weaker against the yen, with last at 107.46 after slumping to a 15-month low of 106.84 overnight as investors remained on edge ahead of the inflation numbers.

Investors tend to seek out the yen in times of market turbulence as the currency is backed by Japan’s current account surplus, which offers it more resilience than currencies of deficit-running countries.

Sterling was lower against the dollar, with down 0.62% to 1.3802.

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