Title: Dollar ascendant as CPI stokes Fed bets; Aussie jumps on strong jobs

14, 2022 02:21AM ET

By: AnalysisWatch

The dollar continued its inexorable rise on Thursday, driven by expectations of faster Federal Reserve monetary tightening and safe haven inflows amid growing fears of a recession.

The dollar marked a fresh 24-year high above 128 yen and approached parity with the euro again after briefly breaching that level overnight.

The Australian dollar also rose after good labor market data fueled speculation about a large interest rate hike by the Reserve Bank.

Singapore's dollar and the Philippine peso strengthened against their U.S. counterparts after their respective monetary authorities were surprised by tightening monetary policy without a cycle.

The U.S. dollar rose 0.6% to 138.235 yen after reaching 138.28 yen for the first time since September 1998.

The euro weakened 0.34% to $1.0024. On Wednesday, it had reached $0.9998 for the first time since December 2002.

U.S. consumer price data released overnight showed inflation, already at its highest level in four decades, accelerated even further.

Traders increased bets that the Federal Reserve could raise interest rates by 100 basis points at its July 26-27 meeting. A hike of at least 75 basis points is considered almost certain.

Raphael Bostic, President of the Atlanta Fed, backed up this speculation by saying that higher-than-expected inflation allowed for a full basis point hike.

Later, the Bank of Canada surprised markets with a one percentage point rate hike, further fueling bets on the Fed.

The greenback was unchanged at C1.29805 on Thursday after losing 0.32% overnight.

The U.S. dollar fell 0.5% to S $1.396 after the Monetary Authority of Singapore tightened its policy to fight rising inflation outside its scheduled meetings on Thursday.

The greenback lost 0.37% to 56.08 Philippine pesos after the central bank surprised with a 75 basis point hike.

The Australian dollar rose 0.21% to $0.67725, reversing an earlier loss after the unemployment rate fell to a 48-year low on Thursday.