Dollar Rises Against Rivals On Rate Hike Bets

(RTTNews) - The U.S. dollar climbed higher against its major rivals on Thursday, riding on expectations about aggressive monetary tightening by the Federal Reserve after data showed a bigger-than-expected increase in U.S. inflation in the month of June.

With inflation soaring to a 40-year high, analysts expect the Fed will likely raise rates by 100 basis points later this month.

Atlanta Federal Reserve Bank President Raphael Bostic signaled the possibility of a 100 basis point increase at the next meeting.

"Everything is in play," Bostic said during a tour of Tampa and St. Petersburg.

In economic releases today, the Labor Department's report said its producer price index for final demand jumped by 1.1% in June after climbing by an upwardly revised 0.9% in May.

Economists had expected producer prices to increase by 0.8%, matching the advance originally reported for the previous month.

The annual rate of producer price growth accelerated to 11.3% in June, reflecting the largest spike since a record 11.6% jump in March. Economists had expected the annual rate of producer price growth to slow to 10.7 percent in June from 10.9 percent in May.

Another report from the Labor Department showed U.S. consumer prices also surged by more than expected in the month of June.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly inched higher in the week ended July 9th, with claims rising to 244,000, an increase of 9,000 from the previous week's unrevised level of 235,000. The uptick surprised economists, who had expected jobless claims to come in unchanged.

The dollar index rose to 109.29 earlier in the day, and despite dropping to 108.66, remains firmly placed above the flat line with a gain of about 0.65%.

Against the Euro, the dollar firmed to $0.9953 before easing to $1.0015, still up nearly 0.5%.

The dollar is stronger against Pound Sterling at $1.1825, against Wednesday's close of $1.1888.

Against the Japanese currency, the dollar is trading at 138.91 yen, gaining more than 1% from 137.43 yen.

The dollar is stronger against the Aussie with the pair trading at 0.6745.

Against Swiss franc, the dollar has firmed to CHF0.9839 from CHF0.9789. Meanwhile, the loonie has dropped to 1.3107 against the dollar, as oil prices drift lower on demand concerns.