By Scott Kanowsky
Investing.com -- The euro slumped to below parity against the dollar for the first time in 20 years on Wednesday, as investors fled for the safety of the greenback after U.S. consumer prices touched a fresh four-decade high in June.
As of 0857 EST (1257 GMT), the euro was down 0.18% at $1.0020. The single currency had recovered slightly from a low of $0.9999 touched following the release of the latest consumer price index from the U.S. Bureau of Labor Statistics.
The key measure of annual inflation rose to 9.1%, exceeding analyst forecasts. The jump was largely affected by base effects stemming from developments 12 months ago, but still suggests a widespread uptick in price pressures.
On a month-to-month basis, prices increased by 1.3% - the biggest monthly gain since 2005 - due in particular to big leaps in the cost of food, gasoline and shelter.
The data piles further pressure on the Federal Reserve to aggressively hike interest rates in a bid to tamp down red-hot inflation. But concerns remain that these big rate rises may instead lead to a broader economic slowdown.
The benchmark 10-year U.S. Treasury yield - often used as a proxy for economic risk - rose by about 8 basis points to 3.034%. The United States 2-Year yield, more reflective of expectations for Fed rate policy, also jumped by 12 basis points to 3.17% - its highest level in three weeks. Bond prices tend to move inversely to yields.
Meanwhile, the dollar index, which tracks the greenback against a basket of other advanced economy currencies, was higher by 0.08% to 107.99, edging back up toward a 20-year high touched on Tuesday.