The dollar gained against every major currency as September trading opened, with EUR/USD slipping 0.19% as US Treasury yields climbed. Eurozone inflation accelerated to 3.3% in August, but a softer core reading gives the ECB room to stay measured on policy.
The dollar started September higher against all seven major currencies, with EUR/USD trading in a 1.1589 to 1.1624 range, a spread of 35 pips. The euro's 0.19% decline left it stronger than the New Zealand dollar but weaker than the British pound, which held up best against the greenback.
US yields moved higher beyond the two-year maturity, extending pressure on longer-dated bonds. The 10-year yield rose to 4.780%, up 2.2 basis points, while the 30-year climbed to 5.2719%. The move followed Fed Chair Kevin Warsh's hawkish Jackson Hole message on Friday, and markets now price roughly a 65% chance of a September rate hike.
Euro area preliminary inflation accelerated to 3.3% in August from 2.9% in July, matching expectations, with energy inflation the main driver, rising to 14.3% from 10.3%. However, core inflation eased to 2.4%, below the 2.5% estimate and the prior reading, while services inflation slowed to 3.0% from 3.3%.
That split leaves the ECB balancing higher energy costs against some moderation in underlying price pressures. The report keeps a September hike in focus, but the softer core reading gives policymakers a reason to be measured about what follows.
Source: Investinglive
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