The rise in annual inflation is the latest sign of strengthening inflation pressures that could encourage the Fed to continue raising interest rates this year.
Market action was interrupted by various holidays around the world but overall the U.S. dollar continued to rebuild the momentum it had after the elections. The minutes from the U.S. Federal Reserve meeting in November sent a strong signal about a December rate hike. The CME’s FedWatch tool is showing a 93.5 probability of a rate hike on December 14.
The U.S. non farm payrolls (NFP) report hit all the right notes with job gains, wage growth and small upticks in the participation rate leaving the unemployment rate steady at 4.9 percent but the biggest contribution was easing market fears about the slowdown of the American economy after a soft advanced gross domestic product (GDP).