The US dollar is rising on a hot inflation reading in June, with investors pouring into the conventional safe-haven asset. The greenback has eased since the monthly report was published, but the currency continues to trend higher amid weakness in the broader financial markets. How much higher can inflation go and will it lift the buck even more?

According to the US Bureau of Labor Statistics (BLS), the annual inflation rate increased to 5.4% in June, up from 5% in May. The market had anticipated a reading of 4.9%. The core inflation rate, which omits the volatile energy and food sectors, advanced 4.5% year-over-year last month, up from 3.85% in May. This was also higher than the 4% prediction.

On a monthly basis, the consumer price index (CPI) rose 0.9% in June, up from 0.6% in May. The core inflation rate jumped to 0.9%, more than double economists’ expectations.

Overall, prices surged across most indexes: food climbed 0.8%, energy soared 24.2%, used cars increased 10.5%, and new vehicles picked up 2%. Medical care and household furnishings each slipped 0.1%.

Wall Street is anticipating hot inflation for another year. The Federal Reserve Bank of New York’s Survey of Consumer Expectations for June suggested that median inflation expectations over the next 12 months will accelerate to 4.8%, which is the highest since the series began in 2013.

In other data, the National Federation of Independent Business (NFIB) index spiked to 102.5 in June, up from 99.6 in May.

The financial markets were mixed in early trading, with the Dow Jones Industrial Average (DJIA) down 54 points and the Nasdaq Composite Index up 0.26%. The S&P 500 was flat at 4,384.55.

The Treasury market was mixed, with the benchmark 10-year bond down 0.012% to 1.351%. The one-year bill rose 0.003% to 0.071%, while the 30-year bond slid 0.027% to 1.966%.

The US Dollar Index (DXY), which measures the greenback against a basket of currencies, rose 0.27% to 92.51, from an opening of 92.23. The index has been rebounding over the last month, rallying more than 2%. Year-to-date, the DXY has risen close to 3%.

The USD/CAD currency pair jumped 0.49% to 1.2516, from an opening of 1.2457, at 14:28 GMT on Tuesday. The EUR/USD fell 0.25% to 1.1833, from an opening of 1.1862.