U.S. CPI posts smallest annual rise since October 2021
Euro rises to twoweek high vs dollar
Fed funds futures price in rate rises in March, May

NEW YORK, Feb 14 Reuters The dollar hit a sixweek high against the yen and recovered from a roughly twoweek low against a basket of major currencies on Tuesday as data for January showing the smallest annual increase in U.S. consumer prices since October 2021 did not alter market expectations that interest rates will remain elevated for some time.

The greenback initially fell across the board following the inflation report, but regained its footing as U.S. Treasury yields rose as well.

The Labor Department39;s Consumer Price Index increased 0.5 last month after gaining 0.1 in December, data showed. Monthly inflation was boosted in part by rising gasoline prices, which increased 3.6 in January.

But in the 12 months through January, the CPI grew 6.4, the smallest gain in about 112 years, and followed a 6.5 rise in December. January39;s annual CPI rate though was higher than market forecasts for a 6.2 gain.

Monthovermonth as expected, but upward revisions for last month brought yearoveryear numbers above expectations. This should keep the U.S. dollar strong, said Athanasios Vamvakidis, global head of G10 FX strategy, at Bank of America in London.

Inflation in the U.S. is clearly sticky. This will keep the Fed policies on track, keeping the U.S. dollar strong not necessarily stronger. The big picture is that the inflation…