Dollar rises as hot U.S. inflation data seen keeping Fed hawkish By Reuters

De Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar climbed to a near-four-week high against a basket of currencies on Friday after data showed U.S. consumer prices accelerated in May, boosting expectations that the Federal Reserve may have to continue with interest rate growth until September. fight inflation.

In the 12 months to May, the CPI rose 8.6% after rising by 8.3% in April. Economists had expected the annual CPI rate to peak in April.

The inflation report was released ahead of the Fed’s forecast second 50-basis-point rate next Wednesday. The U.S. central bank is expected to raise its political interest rate by an additional half percentage point in July. It has raised the nightly rate by 75 basis points since March.

“Inflation is now at a 40-year high with little evidence that it has peaked,” said John Doyle, vice president of trade and commerce at Monex USA.

“Stocks are extending losses due to the expectation that the Fed could find the scope to accelerate rates. The green dollar gains on political divergence and risky trading,” Doyle said.

The U.S. Dollar Currency Index, which tracks the green dollar against six other major currencies, was 0.8% higher at 104.16, its highest since May 17, and at 105.01, the two-decade high. touched in mid-May.

For the week, the index grew by almost 2%, its best weekly performance in 6 weeks.

The dollar rose 0.79% against the Swiss franc at 0.9881 francs after the U.S. Treasury on Friday said Switzerland continued to exceed its thresholds for possible currency manipulation under a 2015 U.S. trade law, but refrained from marking it as a currency manipulator.

With U.S. inflation data hitting investors ’risk appetite, the risk-sensitive Australian dollar reversed direction to trade down 0.58% on the day.

Sterling fell 1.5% to $ 1.2315 and was set for a second consecutive week of declines as Britain’s bleak economic outlook left investors on edge.

In cryptocurrencies, bitcoin slipped 3.7% to $ 28,984.33 as the world’s largest digital currency in terms of market value continued to struggle to overcome an attack of selling pressure that took it below the $ 30,000 level in recent sessions.