The employee of a currency exchange shop counts U.S. dollar banknotes in Ciudad Juarez, Mexico July 27, 2023. REUTERS/Jose Luis Gonzalez/File Photo Acquire Licensing Rights
NEW YORK, Oct 13 (Reuters) – The U.S. dollar touched a one-week high against a basket of currencies on Friday, extending its gains from the previous session when hot U.S. consumer prices data reinforced expectations that the Federal Reserve may have to keep interest rates higher for longer.
The consumer price index (CPI) rose 0.4% in September, keeping the annual rate at 3.7%, the same as in August, while economists polled by Reuters had forecast it would gain 0.3% on the month and 3.6% year-on-year.
Data on Wednesday had shown U.S. producer prices increased more than expected in September amid higher costs for energy products and food.
“Traders didn’t really believe in the hot PPI for September until CPI yesterday reinforced it,” Helen Given, FX Trader at Monex USA, said.
“I see yesterday’s big USD move as a correction to the under-reaction to PPI Wednesday,” Given said.
The dollar index , which measures the U.S. currency against six of its major peers, ticked up 0.11% to 106.63. The index, which jumped 0.8% on Thursday, its biggest one-day rise since March 15, is on pace to finish the week up 0.5%.
The dollar was also helped by safe-haven buying driven by the escalating Middle East conflict as Israel urged civilians to leave the northern Gaza Strip.
“Our sense is that the greenback’s renewed strength in…
