The U.S. dollar surged in late trading on Thursday, amid recent robust U.S. consumer price index (CPI) data and rising U.S. Treasury yields.
The dollar index, which measures the greenback against six major peers, was up 0.73 percent to 106.5887 in late trading.
The U.S. Bureau of Labor Statistics revealed Thursday that the CPI increased 0.4 percent month on month in September and 3.7 percent from a year ago, more than expected. Core CPI rose 0.3 percent on the month and 4.1 percent on a 12-month basis, both exactly in line with expectations.
U.S. bond yields soared on the inflation data, with 10-year yields rising to 4.7 percent and 30-year bonds passing 4.8 percent, boosting the U.S. dollar.
Bond yields renewed their upward surge and stocks tumbled immediately after the Treasury auctioned off about 20 billion U.S. dollars of 30-year bonds.
Markets still place a near 90 percent chance that the Fed keeps its key interest rate unchanged next month, according to the CME FedWatch Tool. However, traders raised their expectations for a hike by December to 31.4 percent.
“In short, the report reminded us that the path to 2 percent inflation is unlikely to be smooth sailing and the Fed must continue to err on the side of doing too much rather than too little,” said Bank of America global research U.S. economist Stephen Juneau, who forecasts a rate increase in November.
Additional data showed the labor market is getting into balance, but it remains hot, as the unemployment claims stayed at 209,000 for the week ending Oct. 7, the Labor Department reported Thursday. The four-week moving average of claims, which strips out week-to-week volatility, fell by 3,000 to 206,250.
In late New York trading, the euro was down to 1.0527 dollars from 1.0608 U.S. dollars in the previous session, and the British pound fell to 1.2174 U.S. dollars from 1.2305 dollars.
The U.S. dollar bought 149.8170 Japanese yen, higher than 149.2340 Japanese yen of the previous session. The U.S. dollar was up to 0.9086 Swiss francs from 0.9027 Swiss francs, and it climbed to 1.3692 Canadian dollars from 1.3600 Canadian dollars. The U.S. dollar rose to 10.9933 Swedish krona from 10.9135 Swedish krona.