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Dollar 'on the front foot' as US CPI report reveals decade high

10 August 2018 4:57 PM
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Dollar 'on the front foot' as US CPI report reveals decade high

The US dollar is likely to remain "on the front foot" alongside the biggest gain in US CPI in nearly a decade, analysts have said.

"We have seen the biggest gain in US CPI since September 2008, coming out at 2.9% y/y.

"This will keep the US dollar on the front foot, with the dollar index trading above 96.00," TreasuryONE said on Friday afternoon.

US consumer prices jumped by the most in almost a decade in July, Bloomberg reported, strengthening the case for the Federal Reserve to keep raising interest rates gradually.

On Friday, a Labor Department report showed that the core measure of the CPI – which excludes food and fuel – rose 2.4% from a year earlier, its largest increase since September 2008.

From the previous month, both the main CPI Index and the core rate rose 0.2%, in line with expectations, Bloomberg added.

"USDZAR has just broken R14.00 on the back of Turkey still under massive pressure. Turkey has lost 14% on the currency today and 25% over the last week," TreasuryONE added, noting USDZAR was trading 5% weaker in the past week.

The rand extended its drop after US President Donald Trump announced higher tariffs on Turkish steel and aluminum imports. The move came on the heels of an address by Turkish President Recep Tayyip Erdogan that failed to reassure global markets.

"The rand has been caught up in the maelstrom," Per Hammarlund, chief emerging-market strategist at SEB SE in Stockholm, told Bloomberg.

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Source: fin24.com

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