The US dollar climbed thanks to a positive surprise in the release of US consumer inflation data, as well as negative news hitting a number of its major rivals.

The US Dollar edged higher in major currency pairs on Tuesday (12/March), after being hit by US unemployment data last week. The rise in the US Dollar Index (DXY) briefly hit a three-day high of 103.10s thanks to positive surprises in US consumer inflation data, as well as negative news hitting some of its major rivals.

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The US Department of Labor reported that the Consumer Price Index (CPI) grew 0.4% for the core basket of goods in February 2024, which was higher than the consensus estimate of 0.3%. Annual core inflation growth slowed from 3.9% to 3.8% but was also higher than the 3.7% estimate.

The market responded by reducing speculation over the Fed's interest rate. However, the majority still believe the Fed will start easing its monetary policy in June. LSEG data shows a decline in the odds from around 71% to 67% for a Fed rate cut scenario starting in June.

"The (US) inflation situation is likely to drag on over the next few months, so that might delay the Fed's first rate cut a little longer than expected," said Russell Price, chief economist at Ameriprise Financial Services, as quoted by Reuters, "I expect the first (Fed) rate cut in June to be the most likely and I still think it's probably the most likely."

USD/JPY jumped around 0.7% in today's trading. This was not only because of the release of US inflation data but also because of the statements of some Japanese officials who took a more dovish tone. BoJ Governor Kazuo Ueda presented an assessment of economic conditions that were slightly gloomier than in January, while Finance Minister Shunichi Suzuki said Japan has yet to beat deflation.

GBP/USD slipped around 0.5% in the European session before crawling back up in the New York session. The latest UK labor data derailed sterling, specifically sluggish wage growth and an unemployment rate that exceeded expectations.