Dollar hits fresh 24-year high vs yen after strong US inflation data

The dollar hit a fresh 24-year peak against the yen on Thursday, gaining across the board, after a blistering U.S. inflation report that opened the possibility of a 100-basis-point interest rate hike at next month's Federal Reserve policy meeting.

Data showed U.S consumer prices increased more than expected in September and underlying inflation pressures continued to escalate, cementing expectations that the Fed will deliver another 75-basis-point (bps) rate increase.

The consumer price index rose 0.4% last month after gaining 0.1% in August, the Labor Department said on Thursday. Economists polled by Reuters had forecast the CPI climbing 0.2%. In the 12 months through September, the CPI increased 8.2% after rising 8.3% in August.

"Anybody who says (Fed could) pivot is wishful thinking right now. The Fed has got to get a handle on inflation right now," said Arthur Laffer, president of Laffer Tengler Investments in Nashville, Tennessee.

"Soft landing is also becoming wishful thinking the more they raise rates. We're going to have a really soft, maybe even negative fourth quarter."

Following the data, fed funds futures have priced in a 13% chance of a 100-bps rate hike.

The dollar rose as high as 147.57 yen, the highest since August 1998. It was last up 0.4% at 147.49 yen.

Traders remained on the lookout for Japanese intervention to prop up a struggling yen. Officials have reiterated they stand ready to take appropriate steps to counter excessive currency moves, though whether they wish to defend particular levels remains unclear.

The greenback also soared against the Swiss franc, hitting its highest since May 2019. The buck was last up nearly 1% at 1.0068 francs.

The dollar also gained against the euro, which slid to a two-week low. The euro was last down 0.6% at $0.9659.