Summary Dollar rose against other major currencies as US inflation supported Fed interest rate increase.
NEW YORK (AFP) - The dollar rose against other major currencies Tuesday as US inflation data showed a pick-up seen as support for the Federal Reserve s widely expected interest rate increase.
Though the overall consumer price index was flat in November, underlying inflation hit the Fed s 2.0 percent target, according to the Labor Department.
Excluding volatile food and energy prices, core CPI rose 2.0 percent year-over-year, their largest increase since May 2014.
"The timing is simply impeccable," said Harm Bandholz of UniCredit Economics. "One day before the Federal Reserve is widely expected to raise its target interest rate for the first time in nine and a half years, the core inflation rate hits 2.0 percent!"
The dollar rose to $1.0930 per euro around 2200 GMT from $1.0992 at the same time Monday and gained 0.6 percent at 121.66 yen.
The Fed winds up a two-day policy meeting on Wednesday apparently on track to raise its benchmark federal funds rate, pegged near zero since December 2008 to support the economy s recovery from deep recession.
Investors are primed to focus on the Federal Open Market Committee policy statement, projections on the economy and the policy path and a news conference with Fed Chair Janet Yellen.
"The consumer price data only add to the confidence of those at the Fed who believe it is prudent to start the process of raising rates back toward more normal levels," said Joel Naroff of Naroff Economic Advisors.
