US inflation picks up again

The dollar has strengthened against the euro following the release of stronger than expected inflation data in the US yesterday, rising to just under $.18. It has firmed a touch against sterling to around $1.3850, which in turn leaves the single currency trading slightly lower against the pound at almost 85p

Bond yields in the US popped higher on the back of the inflation numbers with 10-year yields rising by around 5bps to 1.42%, while equivalent German yields were broadly flat at -0.29%

The annual rate of CPI inflation in the US picked up further in June to 5.4% (compared to the consensus forecast of 4.9%), the highest rate since August 2008, while the core – or underlying – rate accelerated to 4.5%, the highest rate recorded since November 1991

Annual CPI inflation also picked up in the UK in June according to data published earlier this morning, though at 2.5% it is substantially below that in the US (albeit up from just 0.4% as recently as February)

Data due today includes industrial production in the Euro area and producer price inflation in the US, while the Chair of the Fed, Jerome Powell, testifies to Congress on the US economy and monetary policy