With Inflation Rates Remaining Sticky, Dollar Price Surges While Sterling Price Declines

The trading price of the greenback has been pushed up in the latest European trading session. It was dire news for the traders who were hoping to see the trading value of the dollar moving downwards.

On the other hand, it was promising news for those who had been hoping to see a surge in the trading price of the dollar.

The reason why the dollar climbed higher is because of the January consumer inflation of the United States remaining in the higher territories.

While the price of the dollar surged, the value of the sterling recorded a decline in the same trading session. The decline was registered by the sterling due to the decrease in the CPI rate of the United Kingdom.

0.3% Surge in DXY

The dollar price index has recorded a significant surge in the latest session. Against the basket of six major currencies, the value of the dollar has surged by 0.3%.

As the DXY recorded a 0.3% surge, it meant that the trading value of the dollar increased to 103.457 against the major currencies.

US Consumer Inflation Data

The consumer inflation data for the United States for the month of January has shown a 6.4% surge on a year-over-year basis. Whereas, the economists had expected that the consumer inflation rate would be higher than 6.2%.

According to economists, it is a highly watched figure that is considered key and core when it comes to the assessment of a country’s economy.

The food and energy products that are considered volatile items are not part of the particular factor.

The particular consumer inflation rate excluding these factors turned out to be 5.6%, more than the 5.5% prediction made by economists.

Inflation is Difficult to bring under Control

These figures show that despite the efforts made by the US Feds, they have not been able to bring inflation under control.

As they have failed to tame the inflation rates, the situation has become favorable for the dollar. With the Feds forced to hike the interest rates, the trading price of the dollar may continue rising.

This is giving an edge to the greenback against the major currencies such as the euro and the sterling in the forex market.

With the inflation rates rising, the Feds will have no choice but to stick with their monetary policy of hiking the interest rates.

That being said, the investors are excited and they want to invest more money into the dollar. This would continue increasing the trading price of the dollar in the forex market in future sessions as well.

Comments by John Williams

The President of the New York Federal Reserve has made a statement involving the inflation rate hikes.

As per Williams, the inflation rates have been rising despite the constant efforts made by the Feds. Given the inflation data coming in for the prior months, the Feds had decided to lower their aggression against the interest rate hikes.

However, as the inflation rates have continued increasing more than expected, the Feds will have to increase the interest rates. They have to go back on their policy and that is going to push the dollar’s price higher.

Williams has made it clear that they will continue hiking the interest rates until they are able to tame the inflation rates. The process will continue until the job is done.

Dollar’s Performance against Rival Currencies

Against the dollar, the trading value of the sterling has recorded a dip. The sterling price took a 0.6% fall in the latest session, falling to a low of 1.2094.

The value of the euro has also fallen by 0.2% against the greenback, moving down to 1.0709. As for the Japanese yen, the dollar’s value has surged by 0.2% against the yen, moving up to 133.32.