Dollar Index Slides as U.S. Inflation Jumps to 4.2%
The dollar comes under pressure on Wednesday amid a surge in U.S. inflation, buoyed by a global energy crisis. The US dollar index, which tracks the Greenback’s value against six major currencies, is down 0.1% to 99.8 on Wednesday as US inflation data surged to a three-year high.
The headline inflation rate rose to 4.2% in May, its highest since April 2023. The global energy crisis is noted as a primary driver of the US inflation surge. However, the consumer price index (CPI) aligned with market expectations.
The greenback remains sensitive to geopolitical developments, and when news gives reason to be hopeful of US-Iran peace talks, the dollar is typically sold.
US consumer inflation surged to a fresh three-year high in May, according to official data released Wednesday, as increased energy prices rippled through the world’s largest economy.
The consumer price index (CPI) rose 4.2 per cent year-on-year, up from April’s 3.8 per cent figure, the US Bureau of Labour Statistics said. It was the highest reading since April 2023, according to official data, but in line with analyst expectations.
The US-Israel war against Iran, launched in late February, has sent energy prices soaring after Tehran retaliated by virtually closing the vital Strait of Hormuz, through which roughly a fifth of global oil and gas normally passes.
US President Donald Trump has insisted that the price shock will be temporary and that a peace deal will be signed soon, but the soaring costs are a key issue for voters as they head to midterm elections in November. South African Rand Climbs Ahead of GDP Data, Bond Auction
