The Bloomberg Dollar Index rose on Tuesday after U.S. October CPI data came in above expectations, further strengthening market bets that the Federal Reserve will raise interest rates at its December policy meeting.
The Bloomberg Dollar Index gained 0.5%. Data released Tuesday by the U.S. Bureau of Labor Statistics showed that the consumer price index excluding food and energy rose 0.3% month over month, above the estimated 0.2%.
"Both headline and core CPI came in above expectations, and the dollar is finding support as rate-hike expectations strengthen," said Andrew Hazlett, a foreign exchange trader at Monex Inc. "Traders had already been convinced the Fed would raise rates in December following Waller's earlier remarks, and the CPI data further reinforced that expectation."
Federal Reserve Governor Waller warned that a one-time 50 basis point rate hike may be needed in December. Dallas Fed President Logan said she supports at least two more 25 basis point increases. Win Thin, chief economist at Bank of Nassau 1982, said the inflation data is too high and a 25 basis point hike in December is a foregone conclusion, adding that "given Waller's stance, we may see at least one official vote for a 50 basis point increase."
GBP/USD fell 0.8% to 1.3338. EUR/USD declined 0.6% to 1.1160. European Central Bank Chief Economist Philip Lane said that if data in the coming weeks shows no change, the ECB should raise rates again at its next meeting. USD/JPY rose 0.5% to 158.69. AUD/USD dropped 0.9% to 0.6867.
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