The U.S. dollar rallied higher against a basket of currencies on Thursday after data showed producer prices posted their highest annual increase in more than a decade.
The dollar index = USD, which measures the greenback against a basket of six rivals, rose 0.1% higher at 93.019.
On Thursday, the Labour Department said that the U.S. producer prices increased more than expected in July, indicating high inflation could stay for a while.
In the 12 months through July, the Producer Price Index (PPI) rose 7.8%, a record high since the measure was introduced just over a decade ago. The PPI for final demand increased 1.0% last month after increasing 1.0% in June. Three-quarters of the gain was led by a record one-month increase in final demand services, while the advance of the good was half what it was in June.
Investors, however, remain wary of any signs of inflation running too hot as it could incite the Federal Reserve to pull forward its timing on tapering of asset purchases and interest rate hikes.
“The U.S. dollar held near the top of a tight overnight range as fresh data renewed pressure on the Fed to shift away from low-rate policy,” says Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The greenback has gained a stronghold since mid-June – hitting its highest since April 1 at 93.195. On August 11, the greenback hit a two-week high against the British pound overnight at $1.3827 and a one-month high of 0.9234 Swiss francs.
Meanwhile, the Sterling on Friday slumped to its lowest levels since July 27, down 0.15% against the dollar to $1.3790. On Wednesday, the euro was flat against the dollar at $1.17390 after recovering from a four-month low of $1.1706. Bitcoin prices jumped beyond the $ 48,000 mark on Saturday.