Dollar Registers Biggest Rise in About a Month Following Inflation Surge

The U.S. Dollar (USD) rose on Tuesday across the board, following the release of June’s inflation reading that showed an increase in consumer prices that exceeded market expectations.

The Consumer Price Index (CPI) jumped by 5.4% on an annual basis last month, compared with a 5% increase in May, according to data by the U.S. Bureau of Labor Statistics.

This marked the biggest increase and the fastest pace for the CPI since 2008.

In addition, the U.S. Treasury bond yields rose for the third consecutive session, with the benchmark 10-year bond yield rising from 1.34% to 1.42%, while the two-year bond rate increased from 0.23% to 0.27%.

The Wall Street Journal Dollar Index registered its biggest increase since June 18, adding 0.46% to reach the level of 87.39, maintaining a rising trend for the second day in a row, to finish the highest closing level since April 2.

The increase was mainly attributed to the 0.73% rise against the Euro (EUR), with the EUR/USD reaching 1.1776, while the British Pound (GBP) dropped 0.48% to the greenback with the GBP/USD settling near 1.3816. Furthermore, the USD recorded a 0.24% increase against the Japanese Yen (JPY) with the USD/JPY pair reaching 110.63.

Markets are anticipating the Federal Reserve Chair Jerome Powell’s testimony before Congress, with an appearance before the House of Representatives Financial Services Committee on Wednesday, followed by another testimony before the Senate’s Committee on Banking, Housing, and Urban Affairs.