US dollar hits 7-month high against euro

[NEW YORK] Signs of possible inflation gains in the United States helped boost the dollar to its highest level against the euro since April on Tuesday.

The dollar rose to US$1.0644 per euro, and was slightly higher against the yen but fell against British pound.

Analysts said that although the 0.2 per cent rise in the US consumer price index in October was weak, underlying gains in health care, insurance and housing costs were likely to accelerate core inflation, giving the Federal Reserve more reason to begin raising interest rates in December.

Meanwhile, another senior European Central Bank official suggested it might need to loosen monetary policy in the coming month.

"It's key for a central bank to keep inflation expectations anchored, especially in a period of slack in the economy, and we have some signals that these inflation expectations are still fragile," ECB executive board member Peter Praet said in a Bloomberg interview.

AFP