Dollar surges on rise in US inflation
An unexpected jump in US core inflation in April sparked a surge in the dollar Friday, capping a week-long rebound by the greenback.
The dollar added more than 1.5 cents against the euro immediately after the US Commerce Department reported that core consumer prices -- those excluding food and energy -- jumped 0.3 percent in April from March, the largest one-month rise in more than two years.
While core prices were up a modest 1.8 percent year-on-year, the pace for the past three months is 2.6 percent, the fastest in almost four years, noted Ian Shepherdson of Pantheon Macroeconomics.
"Upside inflation risk is no longer a crazy idea," he said.
The dollar's gain was further supported when Federal Reserve Chair Janet Yellen said she expects economic growth will be good enough to merit a rise in the federal funds rate "at some point this year."
"Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy," she said.