Kevin Buckland

TOKYO, Reuters – On Friday the U.S. dollar surpassed major peer currencies to record a week of gains. This was despite bets on earlier Federal Reserve rate increases following data showing that U.S. inflation has been at its fastest pace in over three decades.

The against 6 peers currency measure, Hit a 16-Month High of 95.256. It is on course for an increase this week of 1.08%.

Euro fell back to $1.1439 after a 16-month low, while sterling dropped to $1.33565. This is its lowest level of the year.

Wednesday data revealed a wide-ranging rise in U.S. Consumer Prices at the Fastest Annual Pace Since 1990. It cast doubt on the Fed’s assertion that prices will remain stable and fuelled speculation that policymakers might raise interest rates sooner than originally thought.

The market prices a rate increase by July, and another by December.

Kimberley Mundy, strategist at Commonwealth Bank of Australia (OTC) wrote that “we still believe market pricing has room for firmer, especially in 2023 which can further support USD,” in a client letter.

By contrast, “interest rate futures are too aggressive in pricing in (European Central Bank) rate increases for next year considering ECB policymakers are not budging from their ultra‑dovish guidance,” giving scope for further euro weakness, she said. 

Traders will closely monitor the University of Michigan’s inflation survey and JOLTS data on job openings, which are both available later in this global day.

John Williams, the New York Fed President, speaks online at an event that could give a peek into how policymakers react to this red-hot inflation print.

Philip Lane, the chief economist of European Central Bank speaks at another event.

Dollar reached 114.265 yen Friday. It was a new one-week high.

For the second day in a row, it touched a 2-1/2-week high at 0.9224 Swiss Franc.

Andrea Maechler, a member of the Swiss National Bank’s governing board, stated that the Swiss Franc was still in high demand due to market uncertainty and the continuing COVID-19 pandemic.

Risk-sensitive Australian dollars fell to $0.7283 on the first day in more than one month.

New Zealand dollars fell as low at $0.7005, which is the lowest level since Oct. 14.

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Prices for currency bids at 0128 GMT

Description U.S. Close RIC Pct Change Pct High Low Bid

Previous change

Session

Euro/Dollar

$1.1437 $1.1450-0.11%-6.39%+1.1453+1.1437

Dollar/Yen

114.2800 113.9800 +0.00% +0.35% +114.2900 +0.0000

Euro/Yen

130.69 130.58 +0.08%+2.97% +130.7400+130.5400

Dollar/Swiss

0.9224 +0.16% +4.27% +0.9225+0.9215

Sterling/Dollar

1.3355 1.3363 0.0.05% -2.244% +1.3372

Dollar/Canadian

1.2594 1.2582 +0.10%-1.09% +1.2595, +1.2582

Aussie/Dollar

0.7283 0.7291 0.532% +0.7296 +0.7283

NZ

Dollar/Dollar 0.7004 0.7022 -0.25% -2.46% +0.7023 +0.7004

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