Summary The dollar inched higher on Tuesday after encouraging US inflation.
NEW YORK (AFP) - The dollar inched higher Tuesday after encouraging US inflation and housing data strengthened the case for a Federal Reserve interest rate in the coming months.
An uptick in energy prices pushed the consumer price index up 0.2 percent in February, the first monthly increase since October. But compared with a year ago, CPI was flat.
Core CPI, stripping out food and energy prices, rose 0.2 percent for the second straight month and were up 1.7 percent from a year ago.
"Although this rate remains lower than the Fed s 2.0 percent target, it reflects an important lack of pass-through from headline to core. From an economic perspective (and, more importantly, in the Fed s eyes), this is good news because it implies that consumer demand remains relatively strong," said BBVA in a research note.
Separate data showed US sales of new single-family homes surged in February to a seven-year high, confounding analyst expectations of a decline.
"Based on the price action of the US dollar today, the bulls have not given up," said Kathy Lien of BK Asset Management.
"In the face of an initially mixed consumer price report, the dollar fell sharply against all of the major currencies but as the good news started to pour in, the greenback recovered ending the day near its highs versus the euro, British pound, Swiss franc and Japanese yen,"
"Investors are looking at each piece of incoming data as evidence to confirm or deny the Fed s plans to raise rates," she said.
