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FOREX-Dollar climbs with rate hike speculation raging on U.S. inflation surge

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    * Sterling hits lowest point since December vs Dollar
    * Euro drops to weakest level against dollar since July
    * Bitcoin hits record high before turning lower 

 (Updates prices, adds comments)
    By Sinéad Carew
    NEW YORK, Nov 10 (Reuters) - The dollar index jumped sharply
on Wednesday, hitting its highest level since July 2020, after
U.S. consumer prices surged to their highest rate since 1990,
fueling speculation that the Federal Reserve may raise interest
rates sooner than expected. 
     The consumer price index rose 0.9% last month after gaining
0.4% in September and in the 12 months through October, the
consumer price index accelerated 6.2%. the U.S. Labor Department
said on Wednesday, while analysts expected on average the rise
to be limited to 5.8%.
     At 1543 EDT (2043GMT), the dollar index, which
measures the greenback against other major currencies, was up
0.96% at 94.8580 after reaching a high of 94.876, its highest
level in more than 15 months.
    While the Fed last week restated its belief that the current
 inflation surge would be short-lived, many investors were
suggesting stickier than expected inflation may force the Fed to
increase interest rates. 
    "An inflationary looking print gets investors speculating
about an earlier rate hike than the Fed would like to do," said
Erik Bregar, an independent FX analyst. 
    The dollar added to its gains as the session wore on with
help from the easing of a rally in gold prices and the
expiration of euro/dollar options, according to Bregar.
    Then greenback got a further boost after 1300 EDT following
a weak 30-year bond auction that pushed U.S. treasury yeilds
    The euro was last down 1% at $1.1481 after earlier
touching $1.1480, its lowest level since July 21 2020.
    Meanwhile sterling fell to its lowest level since
December 23 while Britain and the European Union looked far from
finding a post-Brexit agreement over Northern Ireland, adding to
pressure from the U.S. inflation data. 
    Sterling was last down 1.12% at $1.3406 after blowing past
Friday's low $1.3425, when the currency was hammered by the Bank
of England's surprise decision to keep rates unchanged.   
    In cryptocurrencies, bitcoin jumped to an
all-time high of $69,000.00 after the U.S. inflation data but
proceded to lose ground and was last down 1% at $66,221.75.   
    While the Federal Reserve is already tapering its bond
buying, Nancy Davis, founder of Quadratic Capital Management in
Greenwich, Connecticut said "rate hikes might not be enough to
reverse inflation" because the Fed doesn't control supply chain
bottlenecks and fiscal spending.
    “If inflation doesn't subside, the Federal Reserve may need
to taper at a more substantial rate and hike interest rates,
which could hurt stocks and bonds,” said Davis. 
    Against Japan's yen the greenback was last up
0.89% to 113.875 yen after touching a session high of 114 yen.
On Tuesday the dollar had hit a month-low against the yen.
    Greg Anderson, global head of foreign exchange strategy at
BMO Capital Markets in New York said the "pretty shocking"
inflation data including sharp housing price increases suggest
that high consumer prices are "not likely to prove transitory."
    The Australian dollar was down 0.64% against the greenback
at $0.733 after earlier hitting $0.73270, its lowest
level since Oct. 13. The New Zealand dollar was down 0.95% at

    Currency bid prices at 3:43PM (2043 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
 Dollar index                 94.8580        93.9720     +0.96%         5.420%        +94.8760    +93.9620
 Euro/Dollar                  $1.1481        $1.1596     -1.00%         -6.04%        +$1.1595    +$1.1480
 Dollar/Yen                   113.8750       112.8800    +0.89%         +10.22%       +114.0100   +112.7800
 Euro/Yen                     130.74         130.87      -0.10%         +3.01%        +131.4100   +130.6500
 Dollar/Swiss                 0.9180         0.9112      +0.76%         +3.77%        +0.9186     +0.9110
 Sterling/Dollar              $1.3406        $1.3560     -1.12%         -1.86%        +$1.3565    +$1.3407
 Dollar/Canadian              1.2495         1.2436      +0.48%         -1.87%        +1.2499     +1.2387
 Aussie/Dollar                $0.7330        $0.7380     -0.64%         -4.67%        +$0.7393    +$0.7330
 Euro/Swiss                   1.0540         1.0560      -0.19%         -2.47%        +1.0571     +1.0540
 Euro/Sterling                0.8563         0.8551      +0.14%         -4.18%        +0.8564     +0.8532
 NZ                           $0.7064        $0.7130     -0.95%         -1.66%        +$0.7132    +$0.7062
 Dollar/Norway                8.6470         8.5025      +1.69%         +0.69%        +8.6475     +8.5215
 Euro/Norway                  9.9289         9.8640      +0.66%         -5.14%        +9.9387     +9.8519
 Dollar/Sweden                8.7109         8.5735      +0.68%         +6.28%        +8.7114     +8.5738
 Euro/Sweden                  10.0007        9.9334      +0.68%         -0.75%        +10.0020    +9.9400

 (Reporting by Sinéad Carew, Gertrude Chavez Dreyfuss and Karen
Brettell in New York, Julien Ponthus and Saikat Chatterjee in
London; Lisa Pauline Mattackal in Bengaluru, Editing by Emelia
Sithole-Matarise and Alistair Bell)

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