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Federal Reserve Chairman Jerome Powell on Wednesday warned against over-interpreting data showing the largest year-over-year increase in the Consumer Price Index (CPI), while acknowledging that the reading was substantially higher than expected. Speaking at a hearing of the House Financial Services Committee, Powell said, ‘The CPI reading was higher than almost all forecasts, but I just want to caution on two points. First, we don't get excited by one or two good readings and we don't get excited by one or two bad readings. Second, our inflation targeting focuses on the Personal Consumption Expenditures (PCE) price index because we think it's a better measure of inflation. As such, you need to know how the conversion from CPI to PCE works, and we'll have more data on that tomorrow from the Producer Price Index (PPI). Later tomorrow we will know what the PCE reading is.’

The dollar index, which measures the greenback against major currencies, fell 0.02 per cent on the day to close at 107.938 at the end of the currency market.