Dollar volatility jumps as consumer price inflation surges

The dollar initially rallied against most major fiat and crypto currencies today following reports of rapidly rising U.S. consumer prices for the month of January.

Over the past 12 months the CPI has jumped 7.5%, one of the largest increases since 1982.

The larger than expected figure has fueled speculation the FED will be very aggresive with interest rates hikes this year. Futures markets are pricing in a high chance of a 50 basis point hike in March.

Later in the day, the dollar reversed course as market participants started taking into account potential interest rate hikes in other advanced economies as their central banks grapple with rising inflation.

However not all cental banks are convinced yet higher inflation is here to stay. The central bank of Sweden has not made any aggressive moves on interest rates or monetary policy, saying that rising inflation is only temporary.

While the Japanese cental bank said it would start purchasing unlimited 10-year government bonds at an interest rate of 0.25% to prevent any dramatic moves in the market.

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