Investing.com – The U.S. dollar surged to a 19-month high against a basket of major peers on Thursday, retaining powerful momentum as hotter-than-expected U.S. inflation data and hawkish Federal Reserve commentary cemented market expectations for another interest-rate hike next month.
The U.S. Dollar Index, which measures the greenback against six major rivals, edged up 0.1% to 103.048 by 0728 GMT, reaching its highest level since early April 2025. The advance consolidates a robust 0.7% surge from the previous session, propelled by the realization that U.S. price pressures remain stubbornly entrenched.
The greenback’s sustained strength stems from October’s U.S. Consumer Price Index (CPI) report, which showed headline consumer prices rising 0.4% month-on-month, eclipsing economist expectations for a 0.3% increase.
The upside inflation surprise has been aggressively amplified by U.S. central bank officials, who have adopted a noticeably hawkish tone this week. Several policymakers have signaled that a larger, 50-basis-point rate increase could actively be considered if inflation remains elevated.
Consequently, financial markets have rapidly repriced the Fed’s year-end trajectory. According to CME FedWatch data, traders are now pricing in a commanding 91% probability of a rate increase at the December policy meeting.
Meanwhile, the British pound found a fundamental lifeline, bouncing off its lowest levels in nearly a month after official data revealed the UK economy expanded by a resilient 0.7% in the third quarter, temporarily insulating sterling from the dollar’s broader gravitational pull.
Yen teeters near 160
The dollar’s massive yield advantage exerted pressure on the Japanese yen, pushing the currency dangerously close to a threshold that has historically triggered aggressive state action.
The dollar-yen pair traded 0.1% higher at 159.92, building on a 0.7% jump from Wednesday.
Currency desks are cautiously monitoring the psychologically critical 160-per-dollar level, as the widening interest-rate differential between the United States and Japan easily offsets any lingering expectations of further monetary tightening from the Bank of Japan.
