Dollar ends higher after U.S. inflation jumps the most in 13 years

The greenback rose against its peers at New York open as the release of robust U.S. inflation data increased speculation that the Federal Reserve may act sooner to tighten its monetary policy before ratcheting higher near New York close in tandem with U.S. yields.  
  
Reuters reported U.S. consumer prices rose by the most in 13 years in June amid supply constraints and a continued rebound in the costs of travel-related services from pandemic-depressed levels as the economic recovery gathered momentum.    The consumer price index increased 0.9% last month, the largest gain since June 2008, after advancing 0.6% in May, the Labor Department said on Tuesday.    
In the 12 months through June, the CPI jumped 5.4%. That was the largest gain since August 2008 and followed a 5.0% increase in the 12 months through May. Excluding the volatile food and energy components, the CPI accelerated 0.9% after increasing 0.7% in May.  
  
Versus the Japanese yen, dollar traded sideways in Asia and dropped from 110.44 ahead of European open to session lows at 110.21 ahead of New York open. The pair then jumped to 110.55 in New York morning after the release of U.S. inflation data before retreating to 110.29 in tandem with U.S. yield but later rallied to session highs of 110.64 near the close on broad-based usd's rebound.  
  
The single currency initially retreated from 1.1875 in Asian morning to 1.1793 in New York morning after upbeat U.S. inflation data before staging a rebound to 1.1832 in tandem with rise in U.S. stocks. Later, euro met renewed selling and fell to a 3-month trough of 1.1773 near the close on rally in U.S. yields.  
  
The British pound briefly edged up to session highs at 1.3905 in Asian morning before tumbling to an intra-day low at 1.3800 at New York open on usd's broad-based strength before staging a short-covering rebound to 1.3857 but only to retreat to 1.3810 on rise in U.S. yields.  
  
In other news, Reuters said that the European Central Bank has pledged to be "persistent" and will not repeat its past mistake of tightening policy too early, its president Christine Lagarde said in an interview published on Tuesday.    "The use of 'persistent' (in the ECB's new strategy) is an indication that there cannot be premature monetary tightening as we have seen it in the past," Lagarde told the Financial Times.    She added it was now time to show that "the persistence we have demonstrated" was having the desired effect of reviving inflation in the euro zone.  
  
Data to be released on Wednesday:  
  
China exports, imports, trade balance, Australia consumer sentiment, New Zealand RBNZ interest rate decision, Japan industrial output, capacity utilization, U.K. CPI, RPI, PPI input prices, PPI output prices, PPI core output, DCLG house price index, France market holiday, EU industrial production, U.S. MBA mortgage application, PPI. Canada manufacturing sales and BoC interest rate decision.