The dollar continues to rise, returns to close to 20-year high as investors await inflation data

The US dollar rose for the fourth straight session on Monday as investors watch for inflation data this week, which are expected to show continuing price pressures in the world’s largest economy, which would prolong the Federal Reserve’s aggressive monetary policy into next year.

The pound sterling, for its part, fell for the fourth consecutive session, despite the fact that the Bank of England extended its support to financial markets.

US data released on Thursday is expected to show headline inflation at 8.1% y/y in September, down from 8.3% in August, but core inflation has risen to 6.5% from 6.3% previous.

Chicago Fed President Charles Evans said on Monday that inflation is much more persistent than the US central bank thought. However, he noted that the Fed may still be able to cut it without a sharp rise in unemployment and without pushing the economy into a recession.

The US Dollar Index =USD was up 0.3% at 113.10, after hitting lows around 110 last week and getting back close to last month’s 20-year high of 114.78. The euro EUR=EBS was down 0.4% at $0.9699.

“The dollar maintains its advantage ahead of the inflation data, which is expected to remain very high and support the Federal Reserve’s stance to raise long-term interest rates,” said Joe Manimbo, market analyst at the payment company Convera in Washington.

US data from last Friday showed that unemployment fell unexpectedly and that the US economy added more jobs than expected in September, sending bond yields higher as traders raised bets that the Federal Reserve will raise interest rates by 75 basis points in November, for the fourth consecutive meeting.

Geopolitical tensions and rising oil prices also sparked renewed nervousness about growth, pushing investors back into the dollar.

Russia bombed kyiv and other Ukrainian cities with missiles in response to an explosion that hit their only bridge to Crimea.

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