Dollar Weakens After U.S. Inflation Reaches Historic Levels

The U.S. dollar continues to fall this evening after U.S. inflation numbers are released. The data shows an increase in inflation last seen 40 years ago.

  • The US dollar index against other currencies fell 0.34% to 95.290.
  • The Yen down 0.09% to 115.18 yen per dollar.
  • The Australian dollar rose 0.49% to 0.7245, with the risky Australian dollar hitting its highest in nearly a week.
  • The New Zealand dollar rose 0.31% to 0.6806.
  • The yuan fell 0.13% to 6.3655 per dollar. Chinese data on Wednesday showed that the December consumer price index (CPI) fell 0.3% month-on-month and rose 1.5% year-on-year, while the producer price index (PPI) rose 10.3% year-on-year.
  • The pound rose 0.3% to 1.3675.
  • The baht weakened 0.21% today, trading at 33.370 baht per US dollar.

The U.S. has released inflation data for the month of December. According to the data, core inflation increased by 0.6% MoM and 5.5% YoY. The CPI showed an increase of 7% YoY and 0.5% MoM. A 7% increase has not been seen in the U.S. in 4 decades.

As inflation continues to rise, the Fed will probably be forced to adjust its monetary policy. Fed Chairman Powell has announced during his hearing yesterday that the Fed in March the QE program wants to shut down and raise interest rates this year. However, he did not specify when the rate hike would take place.

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