The US inflation shock has fueled a drastic surge in the US dollar and sent most major currencies to record lows.
The latest data from the Labor Department showed the US consumer price index (CPI) rose 0.1% in August on a monthly basis after being unchanged in July.
While core inflation (excluding volatile food and energy prices) also increased to 0.6% from the 0.3% that was expected and recorded the previous month.
On an annual basis, inflation decreased to 8.3% in August from 8.5% previously. Despite the decline, but the reading recorded was unfortunately stronger than expected to decline to 8.1%.
As a result, investors see that price pressure in the US is still strong and this reinforces expectations of a 75 basis point increase in interest rates at next week's FOMC meeting.
Once the CPI data was released, the US dollar rocketed higher again which saw the dollar index record its biggest daily percentage gain of 1.5% to 109.90.
While most major currencies are back in the doldrums, especially the yen, which has fallen back to a 24-year low against the greenback.
The euro slipped back below parity at 0.9970 against the US dollar, and the pound plunged back to near 37-year lows with investors now awaiting UK inflation data to be released in today's European session.
On the other hand, the Aussie and Canadian dollars sank to two-month lows, while the New Zealand dollar plunged to a more than 2-year low.
