Inflation climbs to highest level since 1983

Key Movers

Demand for the US dollar weakened against a basket of currencies on Wednesday as US Federal Reserve chair Jerome Powell testified on the Semi-Annual Monetary Policy Report before the Senate Banking Committee. Powell reiterated that the central bank will continue raising interest rates to curb inflation. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook,” Powell said as part of prepared comments. Latest forecasts released last week show that rates could roughly double in the second half of the year between 3.25% to 3.5%. The US Dollar Index was down 0.46% trading around 103.96 at the time of writing.

EURUSD and GBPUSD climbed on Wednesday following Powell's testimony, which failed to give a boost to the US dollar. EURUSD pushed back up to 1.06, while GBPUSD advanced to 1.23 at the time of writing. The pound initially fell in London trading following the release of UK CPI data, which climbed to 9.1%. The core reading, which strips out energy and fuel costs, fell from 6.2% to 5.9%, highlighting the surge in energy prices.