NEW YORK (MarketWatch)—The ICE U.S. Dollar Index rose to its highest level since 2003 Thursday, as currency traders bet that a stronger-than-expected core consumer-price index number will prompt the Federal Reserve to raise interest rates sooner than expected.
The index DXY, +1.16% a measure of the greenback’s strength against a basket of six rival currencies, rose 1.15% to 95.1500, according to FactSet data.
Fed officials have repeatedly said that the central bank wouldn’t raise interest rates until it is certain inflation is on track to hit its target annual level of 2%.
The euro EURUSD, -1.44% traded at $ 1.1998, its lowest level since Jan. 26, compared with $ 1.1361 Wednesday.
Core CPI rose 0.2% in January, beating a consensus forecast of 0.1% growth from economists polled by MarketWatch. The headline CPI number, which factors in more-volatile food and energy prices, reflected a 0.7% contraction, in-line with economists’ forecasts.
Currency traders largely dismissed less-flattering jobless-claims data and the solid durable-goods orders report, analysts said. New unemployment claims rose to 313,000 last week, a six-week high.
The volatile durable-goods orders number rose to 2.8% in January, beating expectations. Meanwhile, orders for core capital goods, a proxy for business investment, rose 9.5%.
“After throwing all this data in a blender and setting it to purée, traders have come to the conclusion that this morning’s reports represent a small positive for the world’s reserve currency, and the dollar index is now edging up back up to the mid-94.00s,” wrote Matthew Weller, senior technical analyst at Forex.com.
Elsewhere, the dollar rose to 119.46 yen USDJPY, +0.47% compared with ¥118.87 Wednesday. The pound GBPUSD, -0.77% fell to $ 1.5405, compared with $ 1.5521.