The dollar extended a strong morning rally after CPI inflation figures for the US came in above expectations.
US CPI rose a monthly 0.8 per cent in November, above analysts' expectations for a more modest 0.7 per cent rate. Core CPI also surprised to the upside, with a 0.3 per cent gain against forecasts for it to book another 0.2 per cent increase.
The data reinforces the views that the United States, like many developed economies, is entering a state of "stagflation" - slowing growth accompanied by stubborn inflation pressures.
Beyond interest rate speculation, analysts have noted that the dollar may also be boosted from US companies repatriating foreign capital in order to make up for tight liquidity conditions.
Agencies
