Dollar Advances As Hot U.S. Inflation Data Boosts Rate Hike Bets

(RTTNews) - The U.S. dollar gained ground against its most major counterparts in the European session on Thursday, as the nation's consumer prices increased more than expected in September, intensifying expectations for another 75-basis point rate hike by the Federal Reserve in November.

Data from the Labor Department showed that the consumer price index rose by 0.4 percent in September after inching up by 0.1 percent in August. Economists had expected consumer prices to edge up by 0.2 percent.

Excluding food and energy prices, core consumer prices climbed by 0.6 percent for the second month compared to expectations for a 0.5 percent advance.

The report also showed the annual rate of growth by consumer prices slowed to 8.2 percent in September from 8.3 percent in August, although the annual rate of growth by core prices accelerated to 6.6 percent from 6.3 percent.

Separate data showed that U.S. weekly jobless claims inched up in the week ended October 8.

Initial jobless claims rose to 228,000, an increase of 9,000 from the previous week's unrevised level of 219,000. Economists had expected jobless claims to inch up to 225,000.

Risk sentiment deteriorated on concerns over an aggressive policy tightening by the Fed in an attempt to cool the economy and combat inflation.

The benchmark yield on the 10-year treasury note spiked up to 4.04 percent. Yields move inversely to bond prices.

The currency held steady against its major rivals in the Asian session.

The USD/CHF pair firmed to a 3-1/2-year high of 1.0074. At Wednesday's close, the pair was valued at 0.9972. The greenback may face resistance around the 1.02 region, if it gains again.

The greenback approached a fresh 2-week high of 0.9632 against the euro, up from a 2-day low of 0.9753 seen at 7:40 am ET. The pair had closed Wednesday's deals at 0.9702. Further rally in the currency may find resistance around the 0.95 region.

Final data from Destatis showed that Germany's consumer price inflation hit a new record in September, as initially estimated, on rising energy and food prices.

Consumer price inflation accelerated to 10.0 percent in September from 7.9 percent in August. The rate came in line with the flash estimate.

The greenback recovered to 1.1152 against the pound, following a 1-week low of 1.1299 it touched at 7:40 am ET. The pound-greenback pair had finished yesterday's trading session at 1.1095. The greenback is seen facing upside target around the 1.05 level.

The greenback spiked up to a 2-1/2-year high of 1.3977 against the loonie, after a fall to 1.3777 at 7:40 am ET. The greenback was trading at 1.3813 per loonie at yesterday's close. The greenback is likely to locate resistance around the 1.41 level.

The greenback jumped to a 2-1/2-year high of 0.6170 against the aussie, from a low of 0.6299 hit at 5:30 am ET. The aussie-greenback pair was worth 0.6277 at Wednesday's close. Immediate resistance for the greenback is likely seen around the 0.60 level.

After dropping to a 2-day low of 0.5640 at 7:40 am ET, the greenback firmed to a 2-1/2-year high of 0.5512 against the kiwi. At yesterday's trading close, the pair was quoted at 0.5608. Should the greenback strengthens further, it is likely to test resistance around the 0.54 region.

The greenback, however, pulled back to 146.44 against the yen, from a 24-year high of 147.67 it logged at 9:15 am ET. The pair was worth 146.90 when it ended deals on Wednesday. The greenback may locate support around the 121.00 level.

Data from the Bank of Japan showed that Japan overall bank lending climbed 2.3 percent on year in September - coming in at 590.536 trillion yen.

That's up from 1.9 percent in August.