US data released on Thursday is forecast to show headline inflation at 8.1% year-on-year in September, lower than the 8.3% in August, but that the underlying has risen to 6.5% from the previous 6.3%.
The president of the Chicago Fed, Charles Evans, said on Monday that inflation is much more persistent than the US central bank thought. However, he noted that the Fed may still be able to cut it without a sharp rise in unemployment and without pushing the economy into a recession.
The US dollar index rose 0.3% to 113.14, after last week’s lows of around 110 and getting back close to last month’s 20-year high of 114.78. The euro went down a 0.4%a u$s0.97.
US data last Friday showed unemployment fell unexpectedly and that the US economy added more jobs than expected in September, sending bond yields higher as traders raised bets that the Federal Reserve will raise interest rates by 75 basis points in November, for the fourth consecutive meeting.
“Continued strength in the labor market, Friday’s nonfarm payroll report, gave the Fed carte blanche to continue raising rates,” said Karl Schamotta, chief market strategist, at Corpay in Toronto.
He added that the minutes of the latest Fed meeting, due to be released on Wednesday, “will likely show that policymakers remain willing to inflict serious economic pain on the US and global economy as they try to reduce inflation.”
Geopolitical tension and rising oil prices also sparked renewed nervousness about growth, pushing investors back into the dollar.
Russia bombed kyiv and other Ukrainian cities with missiles in response to an explosion that hit its only bridge to Crimea.
Source: Ambito
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