The Dollar Hits Three-Month Highs After Inflation Data
The Dollar Soars to Three-Month Peaks
The dollar climbed to three-month highs on Tuesday after U.S. inflation data for January surpassed expectations, reinforcing the belief that the Federal Reserve will maintain interest rates in March.
Yen Experiences Significant Impact
The greenback also broke the 150 yen mark for the first time since November following the release of the data.
Consumer Price Index (CPI) Data
January’s data revealed a 0.3% increase in the Consumer Price Index (CPI) on a monthly basis, surpassing economists’ predictions of a 0.2% rise. On a year-on-year basis, the CPI grew by 3.1%, exceeding the estimated growth of 2.9%.
Core CPI and Yen Movement
Excluding food and energy components, the CPI saw a 0.4% increase last month, following a 0.3% rise in December. The core CPI also advanced by 3.9% year-on-year in January, matching December’s increase. This caused the greenback to surge to 150.58 yen, marking a three-month high.
Impact on the Japanese Yen
The yen, which has depreciated over 5% against the dollar so far this year, is experiencing persistent pressure as investors revise their expectations of the Federal Reserve’s easing cycle.
Market Response and Predictions
The dollar turned positive after the inflation data, reaching a three-month high of 104.87. The first rate cut by the Fed is now anticipated at the June meeting, with an approximately 80% probability.
Other Currency Movements
The euro fell by 0.6% to $1.0705, while bitcoin reached its highest point since December 2021 at $50,383 before dropping below $50,000 after the CPI data. It was last down 1.0% at $49,307.
