Dollar Rises on Stronger-than-Expected Core CPI Report
The U.S. dollar gained ground following a stronger-than-expected core Consumer Price Index (CPI) report, which increased the likelihood of a Federal Reserve rate hike at its upcoming meeting to 88% from 75%. The August core CPI rose by +0.3% month-over-month and remained in line with expectations for annual growth at +2.4%, marking a new five-year low. Despite an initial drop due to falling oil prices, the yield on U.S. 10-year Treasury notes ended slightly higher after the report reinforced inflation concerns. The dollar was also affected by weaker-than-expected consumer sentiment data from the University of Michigan, which fell more sharply than anticipated in September. Meanwhile, European markets reacted mixed: while the euro faced downward pressure due to a stronger dollar and rising oil prices, it received some support following an interest rate hike by the European Central Bank (ECB). The yen weakened against the dollar amid falling crude oil prices but remained supported by comments from BOJ officials hinting at further tightening.
Topics: Dollar Index Federal Reserve Interest Rates Oil Prices US CPI