The U.S. dollar index, which tracks the greenback against six other major currencies, was up 0.8% at 104.16, its highest since May 17, and in sight of 105.01, the two-decade high reached in mid-May. — Photo by Devan Manuel

Saturday 11 June 2022 09:09 GMT

NEW YORK, June 11 – The dollar hit a nearly four-week high against a basket of currencies yesterday after data showed U.S. consumer prices accelerated in May, bolstering expectations that the Reserve federal government may have to continue its interest rate hikes until September to fight against inflation.

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

The inflation report was released ahead of an anticipated second rate hike of 50 basis points from the Fed next Wednesday. The US central bank is expected to raise its key rate by an additional half point in July. It has raised the policy rate by 75 basis points since March.

“Inflation is now at its highest level in 40 years, with little evidence that it has peaked,” said John Doyle, vice president of trading and trading at Monex USA.

“Equities extend losses in expectation that the Fed can find room to accelerate rate hikes. Greenback gains on policy divergence and risky trading,” Doyle said.

The U.S. dollar index, which tracks the greenback against six other major currencies, was up 0.8% at 104.16, its highest since May 17, and in sight of 105.01, the two-decade high reached in mid-May.

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

The dollar rose 0.79% against the Swiss franc to 0.9881 francs after the US Treasury Department said yesterday that Switzerland continued to exceed its thresholds for possible currency manipulation under a trade law. 2015 U.S. but refrained from calling it a currency manipulator.

As US inflation data rattled investors’ risk appetite, the risk-sensitive Australian dollar reversed direction to trade down 0.58% on the day.

The pound fell 1.5% to US$1.2315 (RM5.42) and was poised for a second consecutive week of declines as Britain’s bleak economic outlook left investors jittery.

In cryptocurrencies, bitcoin fell 3.7% to US$28,984.33 as the world’s largest digital currency by market value continued to struggle to overcome selling pressure that left it break below the US$30,000 level in the past few sessions. —Reuters