The pair advances to 152.70, as US CPI data prompts a sharp yield increase, fueling speculation about Fed's rate path

US economic data revealed by the Bureau of Labor Statistics (BLS) showed that inflation is reaccelerating. The Consumer Price Index (CPI) rose by 0.4% MoM and 3.5% on the yearly figure, exceeding estimates, with the latter also the previous reading. Underlying CPI, which excludes volatile items like food and energy, was above projections but remained unchanged compared to February’s data at 0.4% MoM and 3.8% YoY.

That triggered a reaction in the financial markets, as US Treasury bond yields skyrocketed, with the short end of the curve, namely the 2-year T-note, climbing 20 basis points. Consequently, the Greenback refreshed the year-to-date (YTD) highs of 105.10 yet retreated somewhat, as shown by the US Dollar Index (DXY). The DXY is up 0.81%, at 104.95.

Following the inflation report, the Chicago Board of Trade (CBOT) Fed funds futures estimate just two rate cuts by December 2024, with speculators projecting interest rates to end at around 4.97%.

The USD/JPY rose sharply and hit a multi-year high of 152.73, a level last seen in June 1990, ignoring intervention threats by Japanese authorities that include Finance Minister Shunichi Suzuki, who said that he was watching the market with a high sense of urgency and wouldn’t rule out any steps to address excessive moves