The US dollar strengthened against major currencies in trading on the New York foreign exchange market after the United States reported a producer price index that came in higher than expected, reinforcing expectations that the Federal Reserve may raise interest rates next week. The dollar index rose 0.23% to 99.048, with the dollar strengthening against the yen to 154.32 yen from 153.60 yen and gaining against the Swiss franc to 0.8129 francs, while the euro weakened to 1.1613 dollars from 1.1630 dollars. The US Labor Department reported that the PPI for August rose 5.4% year on year, above analysts' forecast of a 5.3% increase and following a 4.8% rise in July. Core PPI rose 4.6%, in line with expectations, after a 4.3% increase in July. West Texas Intermediate and Brent crude oil prices both surged past 100 dollars per barrel after reports of the largest attack on cargo ships since the war between Iran and the United States began in late February, raising concerns about supply disruptions. The CME Group's FedWatch Tool indicated that investors priced in a 70% probability that the Fed will raise interest rates by 0.25% at its September 15-16 meeting, up from 64% before the PPI release. The yield on 10-year US Treasury bonds jumped to its highest level in nearly three years, the 30-year yield climbed to its highest in more than 19 years, and the 2-year yield surged to its highest in more than two years. The euro weakened after the European Central Bank raised its policy interest rate by 0.25% at yesterday's meeting, in line with market expectations and marking its second rate increase this year. Investors are closely watching today's release of the US consumer price index, with analysts expecting CPI to rise 3.4% in August year on year, after also rising 3.4% in July, and Core CPI to rise 2.4% year on year after a 2.5% increase in July.
CME Group Inc