The US dollar is struggling for direction on Thursday after the latest data show that the inflation rate surged to its highest level in 13 years in May. Investors are also combing through the latest initial jobless claims data that came in higher than the market had anticipated. Is this the beginning of a volatile summer for the US economy?
According to the Bureau of Labor Statistics (BLS), the annual inflation rate advanced to 5% in May, up from 4.2% in April. Economists had anticipated a rate of 4.7%. This is the highest inflation reading since September 2008, buoyed by a combination of rising commodity prices, fiscal and monetary expansion, and higher wages.
On a per-month basis, the consumer price index (CPI) dipped 0.6% in May, down from 0.8% in April.
The core inflation rate, which excludes volatile food and energy, advanced to 3.8% year-over-year in May, higher than the market consensus of 3.4%. Month-over-month, the core inflation rate increased to 0.7%.
Will this be enough for the Federal Reserve and the White House to start being concerned? Treasury Secretary Janet Yellen recently changed her opinion on inflation, warning that it would seep into 2021.
The US bond market was mostly in the green following the inflation numbers, with the benchmark 10-year yield up 0.034% to 1.523%. The one-year bill was unchanged at 0.051%, while the 30-year bond jumped 0.032% to 2.20%.
The US Dollar Index (DXY), which measures the greenback against a basket of currencies, edged up 0.03% to 90.15, from an opening of 90.14. The index is on track for a weekly loss of 0.4%, paring its year-to-date gain to around 0.2%.
The USD/CAD currency pair fell 0.21% to 1.2086, from an opening of 1.2112, at 12:50 GMT on Thursday. The EUR/USD rose 0.07% to 1.2187, from an opening of 1.2182.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
United States Dollar,Inflation,U.S. Dollar Index,Consumer price index,Federal Reserve System,United States Dollar, Inflation, U.S. Dollar Index, Consumer price index, Federal Reserve System,,,