OTTAWA (dpa-AFX) - The U.S. dollar climbed higher against its major rivals on Friday after data showing a bigger than expected increase in consumer price inflation raised prospects of aggressive policy tightening by the Federal Reserve.
Data released by the Labor Department showed consumer prices in the country shot up by more than expected in the month of May, raising concerns about the outlook for interest rates.
The Labor Department said its consumer price index jumped by 1% in May after rising by 0.3% in April. Economists had expected consumer prices to increase by 0.7%.
With the bigger than expected monthly increase, the annual rate of consumer price growth accelerated to 8.6% in May from 8.3% in April, showing the biggest surge since December 1981. The annual growth was expected to be unchanged.
Meanwhile, the annual rate of core consumer price growth slowed to 6% in May from 6.2% in April. Economists had expected the pace of growth to decelerate to 5.9%.
A report released by the University of Michigan on Friday showed consumer sentiment in the U.S. has tumbled to its lowest level on record in the month of June.
The preliminary data showed the consumer sentiment index plunged to 50.2 in June from 58.4 in May. Economists had expected the index to edge down to 58.0.
The dollar index, which rose to 104.23, was hovering around 104.20 a little while ago, gaining about 0.95%.
Against the Euro, the dollar firmed to $1.0522 from $1.0619, gaing nearly 1%.
The dollar is trading at $1.2313 against Pound Sterling, strengthening from $1.2495.
Against the Japanese currency, the dollar is slightly stronger, fetching 134.41 yen a unit.
The Aussie is firmer against the dollar at 0.7047, compared to the previous close of 0.7098.
The Swiss franc has weakened to 0.9884 a dollar from 0.9800. The Canadian dollar is at C$1.2782 a U.S. dollar, dropping from C$1.2700, weighed down by lower crude oil prices.
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