US Dollar Index (DXY) Slumps As Inflation Remains Hot, Easing Spurs Investor Confidence

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The US dollar is weakening on Tuesday after inflation remained hot but rose smaller than what the market had anticipated. The greenback has struggled over the last month as the leading stock indices keep posting new all-time highs. Despite the tepid slump, the buck is still on track to finish the year higher.

According to the Bureau of Labor Statistics (BLS), the US annual inflation rate surged 5.3%, matching the median estimate. This is slightly down from 5.4% in July. On a monthly basis, the consumer price index (CPI) rose 0.3%, coming in lower than the market forecast of 0.4%.

The core inflation rate, which removes the volatile food and energy sectors, jumped 4% year-over-year last month. The month-over-month core inflation rate edged up 0.1%.

Here is a look at the price hikes over the last year:

  • Food at home: +3%
  • Food away from home: +4.7%
  • Gasoline: +42.7%
  • Used automobiles: +31.9%
  • New cars: +7.6%
  • Shelter: +2.8%
  • Apparel: +4.2%
  • Medical care: +1%

Investors think that inflation will fall over the next 12 months, according to the Bank of America Fund Manager Survey for September. Financial markets also believe that the Federal Reserve will not pull the trigger on slowing the pace of their monthly bond purchases. However, the Fed Bank of New York’s report of consumers’ inflation expectations climbed for the tenth consecutive month to 5.2%.

what is inflation in financial marketIn other economic data on Tuesday, the National Federation of Independent Business (NFIB) index edged up to 100.1 in August, up from 99.7 in July.

The US bond market was mostly in the red, with the benchmark 10-year Treasury yield down 0.023% to 1.301%. The one-year bill was unchanged at 0.074%, while the 30-year bond slid 0.023% to 1.881%.

The US Dollar Index (DXY), which measures the greenback against a basket of currencies, fell 0.23% to 92.46, from an opening of 92.62. The index is up 2.81% year-to-date.

The USD/CAD currency pair is flat at 1.2649 at 13:52 GMT on Tuesday. The EUR/USD rose 0.13% to 1.1827, from an opening of 1.1811.

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