• The United States Consumer Price Index rose by more than anticipated in April.
• The US Dollar Index peaked at 98.34 with the news, a fresh one-week high.

The United States (US) reported that annualized inflation, as measured by the Consumer Price Index (CPI) rose by 3.8% in the twelve months to April, higher than the 3.3% posted in March and above expectations of 3.7%. Core annual CPI, which excludes volatile food and energy prices, came in at 2.8% following a 2.6% print in March, above the anticipated 2.7%. On a monthly basis, the CPI rose 0.6% as expected, easing from the 0.9% posted in the previous month.

The figures are well above the Federal Reserve (Fed) goal of 2%, and higher month after month, boosting odds for interest rate hikes before the year end. Speculation that rate hikes are coming in the US provides the Greenback with extra near-term legs.

Market reaction

The US Dollar Index (DXY) advanced to a fresh one-week high of 98.34 with the news holding nearby at the time of writing. Persistent tensions in the Middle East and subsequent higher Oil prices hint at continued price pressures also in May, while higher inflation increases the chances of interest rate hikes.