Dollar index up, euro below parity for first time in 2 decades

Dollar and euro currencies

The dollar index rose today, July 13, leading the euro to slump below parity against the dollar for the first time in 20 years, pressured by the US inflation that hit its highest level in 41 years, which in turn raised expectations for higher interest rates.

The US consumer price index rose to 9.1% on an annual basis, exceeding estimates of 8.8%, recording the fastest annual rise since 1981, according to data from the US Bureau of Labor Statistics.

This data bolsters the case for more supersized Fed rate hikes. Markets expect a hike of 75 basispoints in benchmark rates this month to 2.25-2.5%, amid forecasts for higher rates to reach 3.5% by the end of this year.

The dollar index, which tracks the greenback against a basket of six currencies,  rose 0.18% to 108.36 points at 4:12 PM Makkah time, trading near its highest level since 2002.

The greenback rose 0.50% to 137.54 yen, but was steady against the sterling pound at $1.1888.

The dollar was unchanged at $1.0003 euro after dropping below parity for the first time in more than two centuries. The euro inched 0.4% lower following the release of US inflation data earlier today to $0.9998.