The release of US CPI inflation data surpassed expectations, prompting traders to continue to push back the Fed's rate cut time forecast. Also buying the US dollar again.

Based on the latest US inflation data, the US Dollar rallied strongly in all major pairs during Tuesday's New York session (13/February). The US Dollar Index (DXY) rallied around 0.7% and hit a three-month high in the 104.80s.

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The Consumer Price Index (CPI) report showed that the US inflation rate reached 0.3% in January, higher than the consensus estimate of 0.2%. The annual increase was recorded at 3.1%, higher than the estimated 2.9%. In addition, the monthly and annual Core CPI data both exceeded everyone's expectations.

The US CPI inflation report this time provides the same conclusion as the Nonfarm Payroll data series and Jerome Powell's speech last week, namely that the Fed will not cut interest rates as quickly as previously expected. Traders immediately responded by rushing to buy the greenback.

"The Fed has indicated that they're going to go slow, and I think today's data as well as last week's employment data, suggest that they're correct in doing that," said Russell Price, chief economist at Ameriprise Financial, "I think their (the Fed's) message is correct and the market's message of faster cuts doesn't seem to be correct."

"There will be no applause in the FOMC data briefing regarding today's (CPI inflation) release. We expect the Fed to be more comfortable easing in the second half of the year," said Ali Jaffery, economist at CIBC Capital Markets.

Fed Funds Futures data now shows a 50% chance of a Fed rate cut scenario starting in May. Meanwhile, the odds for a June rate cut have increased to around 80%.

The Antipodean currencies were battered in response to this Fed-rate speculation change. AUD/USD and NZD/USD fell more than 1% in just two hours.

GBP/USD briefly spiked thanks to the slump in the unemployment rate this afternoon, but it immediately fell back into the range it occupied last week. The duo fluctuated up and down by around 120 pips in less than two sessions.

USD/JPY broke through the psychologically important threshold of 150.00, occupying its highest position since mid-November. Market participants again ignored the risk of currency intervention by the Japanese authorities.