Dollar Hits 16-month High

The U.S. Dollar hit a 16-month high on Thursday as inflation reached its strongest levels in 30 years and bond market borrowing costs started to rise. The dollar index, an indicator that measures the currency against 6 of its peers, continues to make progress after consumer price data showed that costs across the economy are still rising. The annual increase in inflation reached 6.2%, the most significant increase since the winter of 1990. The dollar was able to push the Euro to $1.15 even though European stocks were inching higher. Plus, benchmark 10-year yields rose about 2 basis points across Europe. Meanwhile, the Japanese Yen hit a 4-year low at 114.15 per dollar. Kit Juckes, a strategist at Societe Generale FX said, “You can’t ignore something that broad-based and it will reinforce that the Fed is going to hike next year.” On Wall Street, investors expect to see a rebound in the markets after seeing its worst day in over a month on Wednesday. ING economist Rob Carnell said, “the inflation numbers surprised on the upside, and they may not even be the peak.” He went on to say, “The market thinks the Fed, and most other central banks, are behind the curve…risk assets hate this.”