Dollar rockets to 16-month highs after hot U.S. inflation; euro sinks
LONDON (Nov 11) - The dollar rose to 16-month highs against the euro and other currencies on Thursday, and the yen fell back towards multi-year lows, after the hottest U.S. inflation reading in a generation encouraged bets on interest rate hikes.
U.S. consumer prices grew last month at their fastest annual pace since 1990, data showed, and traders think the Federal Reserve could respond by lifting interest rates faster than in Europe or Japan.
The euro dropped as the European Central Bank is seen lagging on policy tightening. It slipped to $1.1454 on Thursday, its lowest since July 2020.
"With relative COVID trends still moving against Europe and a broader more negative EM/China backdrop it is hard to see this relative growth under-performance reverse any time soon," said George Saravelos, a strategist at Deutsche Bank, adding the euro could weaken as far as $1.12.
Sterling was also down at a new 11-month low of $1.3365. Data showing Britain's economy lagging rivals in the July-September period did little to help.
The yen extended a sharp reversal of recent gains to fall to 114.15 per dollar - close to the Japanese currency's four-year low of 114.69 reached last month. The Australian and New Zealand dollars recorded one-month troughs.
Reuters
