Dollar rises supported bu highest U.S. inflation

 The dollar was higher on Thursday morning in Asia. The U.S. currency was at its highest levels in 2021 versus the pound and the euro.

The yen took a substantial drop following U.S. inflation increased to its highest level in a generation and fanned bets on interest rate hikes.

The U.S. Dollar Index follows the dollar versus a basket of other currencies that crept up 0.07% to 94.905 at 11:50 PM ET (4:50 AM GMT).

The USD/JPY pair crept up 0.07% on 113.98.

The AUD/USD pair fell 0.38% to 0.7298, and the NZD/USD pair dropped 0.29% to 0.7038.

The USD/CNY pair was higher 0.27% to 6.4055.

The GBP/USD pair crawled down 0.03% to 1.3405. The U.K. issues growth data, including its GDP for the third quarter, succeeding in the day.

, the euro slipped 1% to $1.1476, its weakest level after July 2020. The data revealed that the consumer price index (CPI) rose 6.2% year-on-year and 0.9% month-on-month in October. The core CPI increased 4.6% year-on-year and 0.6% month-on-month.

U.S. Treasury yields also rose. These rates move, particularly at the short end, suggesting traders consider the U.S. Federal Reserve will step in to hike interest rates if prices keep running higher, National Australia Bank (OTC: NABZY) head of FX strategy, Ray Attrill informed Reuters.

He stated that if the market still presents a degree of credibility on the Fed, they will not provide very high inflation to persist indefinitely. If the dollar index goes higher than 95, investors might begin to get out of the way.

It’s quite a high level technically, and if we can cut up through that, more people will be throwing in the towel.

Data’s impact on Fed’s next move

In the Asia Pacific, Australia also published employment data earlier in the day. The data revealed that the employment change decreased by 46,300, and the complete change declined by 40,400 in October. The lay-off rate rose to 5.2%.

Investors now look to the data’s influence on the Fed’s next moves to assess the likelihood of further dollar gains.

 Deutsche Bank (DE: DBKGn) strategist Alan Ruskin told Reuters that we are in a stand-off from a forex standpoint.

On the dollar, they have the classic dilemma. If the Fed won’t reply to high inflation, it is dollar negative. If the Fed brings front tightening, it is dollar positive. Presently, the dollar is broadly between these two worlds.