The US Dollar Index is higher at 108.00 as strong Fed talk is supported by US inflation

The US Dollar Index (DXY) increased 0.15 percent to 108.20 during Thursday's Asian session, supporting the four-day high inflation report and reversing a two-day loss. An increasing sense of pessimism about Europe and concerns about a worldwide economic slump may also be to blame for the recent surge in the dollar index.

Despite being aware of the greatest US inflation numbers in forty years, recent Fed policymakers welcomed the market's hawkish predisposition. Mary Daly, head of the Federal Reserve Bank of San Francisco, recently said that a 75bp hike in July is most likely, but a 100bp increase is still possible, according to the New York Times. Prior to that, Loretta Mester, president of the Federal Reserve Bank of Cleveland, said, "The CPI data does not indicate a smaller rate hike in July than in June," in contrast to Thomas Barkin, president of the Federal Reserve Bank of Richmond, who supported higher rates at the previous meeting.

Despite this, the US Consumer Price Index (CPI) rose by 9.1% year over year in June, as opposed to the 8.8% projected and 8.8% before. The Core CPI, which excludes volatile food and energy prices, dropped from 6% to 5.9%, exceeding the 5.8% prediction of experts. It is noteworthy that the BOC announced a 100 bps rate increase, contrary to what the market had anticipated the day before.

White House (WH) Economic Adviser Brian Deese said CNBC, as reported by Reuters, that the CPI data shows that Congress has to approve legislation to increase semiconductor manufacture in the US. In contrast, US President Joe Biden claimed that the drop in the price of gasoline had rendered the CPI statistics "out of data."

While 10-year Treasury rates dropped four basis points (bps) to 2.93 percent at the close of the Wednesday North American session, Wall Street benchmarks still ended the day in the red. Additionally, US 2-year Treasury rates increased by 3.5 percent in a single day to reach 3.15 percent, which heightened recession fears and strengthened the inversion at the 10-year barrier. As a result, as of the time of publication, S&P 500 Futures had declined by 0.60 percent.

The US Producer Price Index for June and the monthly Jobless Claims numbers will soon grace the calendar and amuse DXY traders. However, there will be a strong emphasis on Fedspeak and risk factors like conversation about the recession.