• U.S. consumer prices surged at their highest rate since 1990, having risen by 6.2% compared with last year.
  • Greg Anderson from BMO Capital Markets in New York called the figure 'pretty shocking'.
  • Data has shown that U.S. producer prices increased solidly in October due to surging costs for gasoline and motor vehicle retailing.
  • Spartan Capital Securities' Chief market economist, Peter Cardillo, has warned that the inflation could be long-lasting.

The dollar rose against major peers on November 10, snapping three days of weakness, after U.S. consumer prices surged at their highest rate since 1990 and fuelled fears inflation could prove stickier than Federal Reserve expectations.

The consumer price index rose 0.9% last month after gaining 0.4% in September and in the 12 months through October, the consumer price index accelerated 6.2%. the U.S. Labor Department said on November 10, while analysts expected on average the rise to be limited to 5.8%.

Underestimating price increases could prove to be a costly policy mistake.

At 1002 EDT (1502 GMT), the dollar index , which measures the greenback against six major currencies, was up 0.31% at 94.2470 after reaching a high of 94.440 immediately after the data was released.

"It's a pretty shocking number, shockingly robust ... Housing inflation tends to be very persistent. If it's running at 3.5% year-over-year, high total CPI inflation is not likely to prove transitory," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

"Markets are pricing in more Fed rate hikes as a result of this number," he said.

Anderson noted that one of the most noticeable reactions to the news was the Mexican peso's decline against the dollar, which was last up 0.27% after touching its highest level against the peso since October 29 .

Against Japan's yen the greenback rose 0.7% to 113.6750 yen after November 9 touching its lowest point against the yen since Oct. 11.

The euro fell 0.32% to $1.1559.

Hammered last week after the Bank of England's surprise decision to keep rates unchanged, sterling was last down 0.30% at $1.3518, but held well above Friday's more than one-month low of $1.3425.

The Australian dollar was up 0.04% against the greenback at $0.7383 while the New Zealand dollar was down 0.29% against the U.S. dollar at $0.7108.

"What do these numbers say? Simply that inflation is going to be long-lasting and structural inflation has picked up speed," said Peter Cardillo, chief market economist at Spartan Capital Securities In New York.

"The bottom line is that this is going to be a real challenge for the Fed in the coming months and suggests that inflation has not peaked," he added.

Data already showed on November 9 that U.S. producer prices increased solidly in October, driven by surging costs for gasoline and motor vehicle retailing, suggesting that high inflation could persist.

In cryptocurrencies, bitcoin jumped after the U.S. inflation data and was last up 1.5% at $68,289.26, below its all-time high of $69,000.00 marked earlier in the day.

Who are the collaborating partners in this SGB Financing Initiative?

The COVID Response Alliance for Social Entrepreneurs is a coalition of 86 global leaders who jointly serve close to 100,000 social entrepreneurs and touch the lives of an estimated 1billion people. Initated out of the World Economic Forum’s Schwab Foundation, its mission is to join hands in support of social entrepreneurs everywhere as vital first responders to the pandemic and as pioneers of a green, inclusive economic reality. In January of 2021, its members launched its 2021 Roadmap through which its members collaborate in 10 areas of work – including capital mobilization under whose umbrella this initiative is being undertaken. Read more about the Alliance here.

The Sustainable Development Investment Partnership (SDIP) is a global platform of public, private, and philanthropic institutions with the ambition to scale and accelerate sustainable investments in developing countries and emerging markets, by creating the conditions for capital to flow where in support of the Sustainable Development Goals (SDGs). SDIP network encompasses multilateral banks, development finance institutions, financiers, private investors, asset owners, asset managers and foundations. As a joint initiative of the World Economic Forum and the Organisation for Economic Co-operation and Development (OECD), SDIP’s mission is to address the systemic challenges to finance the SDGs by creating the conditions for capital to flow where it is needed most. Read more about SDIP here.

The Collaborative for Frontier Finance (CFF), has as its mission to build a better financial ecosystem for SGBs and increase the access to appropriate capital for these businesses, works with diverse stakeholders – including local capital providers, institutional investors, development agencies, philanthropic funders, and field builder organizations – to accelerate financing solutions that target SGBs. With a bias to action, CFF works in three ways: by building and empowering networks of these stakeholders, performing “actionable research” and undertaking market-based initiatives to address systemic barriers. Read more about CFF here.

The Global Steering Group for Impact Investment (GSG) is an independent organization promoting sustainable development and advancing education in impact investment. The GSG was established in 2015 as the successor to, and incorporating the work of, the Social Impact Investment Taskforce established under the UK’s presidency of the G8. The GSG’s currently has 33 countries as its members through its National Advisory Boards (NABs), which are local platforms representing all stakeholders needed to redirect significant capital flows towards positive social and environmental impact. The GSG brings together leaders from finance, business, philanthropy, and governments to drive a shift towards impact investment and more equitable economies for all. Read more about the GSG here.

a chart showing the strength of the dollar against other currencies
This is how the dollar compared to other major currencies.
Image: King USD / Definitive Datastream
Currency bid prices at 10:02 a.m. (1502 GMT).
Currency bid prices at 10:02 a.m. (1502 GMT).
Image: Reuters