Dollar rockets higher after hot August CPI reading

The U.S. dollar soared versus major rivals Tuesday after the August consumer price index came in hotter than expected, stoking expectations the Federal Reserve will continue aggressively tightening monetary policy in its effort to rein in price pressures. The ICE U.S. Dollar Index DXY, +1.44% a measure of the currency against a basket of six major rivals, jumped 1.1%. The index hit a 20-year high last week but subsequently pulled back before Tuesday’s surge. The euro EURUSD, -1.51%, the most heavily weighted component of the DXY, dropped 1.2% versus the dollar to trade just above parity, or $1, while the U.S. currency jumped 1% versus the Japanese currency USDJPY, +1.19% to fetch 144.24 yen, trading near last week’s highs when it hit levels last seen in 1998. A surging dollar is seen as a headwind for prices of commodities priced in the unit, making them more expensive to users of other currencies.