Friday, February 27, 2015

U.S. Dollar Gains Again as Inflation Fuels Fed Rate Bets

The dollar headed for an eighth straight month of gains against major peers after signs U.S. inflation may rebound revived speculation the Federal Reserve has scope to raise interest rates.

A gauge of the greenback erased losses for February, climbing to within 0.1 percent of a record closing high Thursday after a greater-than-forecast increase in so-called core inflation offset concern that overall consumer prices tumbled last month. Fed Chair Janet Yellen told Congress this week that short-term declines in inflation are linked to the plunge in crude-oil prices and are likely to prove temporary.

“Everyone had pre-positioned for a pretty weak CPI,” said Matt Derr, a foreign-exchange strategist in New York at Credit Suisse Group AG. “Even if it wasn’t a huge surprise, it was enough to get that unwound. Things moved pretty aggressively after Yellen’s testimony.”

Bloomberg

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