Dollar Surges after U.S. CPI Rises in September

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Dollar Surges after U.S. CPI Rises in SeptemberThe dollar rose to its highest level in one week versus its major counterparts after a surprise surge in the cost of living in the U.S. indicated the world’s biggest economy remains strong.

A key dollar gauge, the Bloomberg Dollar Spot Index, which tracks the U.S. currency versus a pool of 10 major peers, advanced 0.2 percent to 1,066.69 at 1:34 p.m. in New York. It had earlier touched 1067.70, its highest level in a week.

The euro dropped 0.4 percent to trade at $1.2660 after gaining 0.2 percent earlier. It fell 0.7 percent on Tuesday, the most since Oct. 14. The shared currency plunged 0.3 percent to 135.71 yen, while the yen dropped 0.2 percent to 107.18 per dollar, its fifth consecutive day of straight declines, a trend last witnessed in Sept. 12.

“The consumer-price-index numbers helped the dollar and are consistent with the recovery in risk sentiments,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, told Bloomberg News. “It doesn’t change that much from the Federal Reserve’s perspective, but it helps ease the fears that global central banks are losing the fight against disinflation.”

The U.S. consumer price index rose 0.1 percent in September, up from a 0.2 percent decline in August.

The pound fell after minutes of the Bank of England’s policy meeting indicated that optimism about global economic growth faded, weighing on investor speculation that the central bank may raise interest rates soon. The U.K. currency declined 0.3 percent to trade at $1.6066.

The Canadian dollar surged the most in at least a week after the Bank of Canada hinted it may consider hiking interest rates after it erased the word “neutral” from its statement detailing its next action. The currency jumped 0.1 percent to C$1.1214 per U.S. dollar. It had earlier touched C$1.1184, its highest level since Oct. 13. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com