American dollar sky-rocketed on inflation. Overview for 11.11.2021

The major currency pair dropped to the lows of July-2020. The current quotation is 1.1480.

American inflation statistics or October detonated like a real bomb. The market had expected these data to become the main event of the week but had never counted on such an effect.

The US CPI in October grew by 6.2% y/y. This is the high since November 1990. A month ago, the value was 5.4%. This time, the forecast was 5.9%. Inflation in the US grew by 0.9% m/m, while growth by 0.6% had been expected.

What does this mean for the USA, its monetary policy, and why did the dollar react this way?

\Things are quite simple. In the eyes of investors, speeding up of inflation can make the Federal Reserve System increase the interest rate sooner than they plan now. Currently, the Fed is expected to reduce the stimulation program smoothly, winding up the QE by the mid-2022 and only then approaching the interest rate. When inflation is making such large steps, things can also speed up.

This is what has been supporting the dollar since the publication.