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• The U.S. dollar fell on Wednesday despite a report of stronger-than-expected inflation data and an increase in interest-rate expectations, raising the possibility that the currency is in a period of secular downturn.

The announcement that the U.S. core Consumer Price Index posted its biggest gain in a year boosted expectations that price pressures may accelerate, prompting a faster pace of interest rate increases from the Federal Reserve. The possibility that the Fed would clamp down on inflation initially drove up the dollar index .DXY.

But the dollar quickly pared those gains, falling to a session low of 88.94 against a basket of currencies, even as traders added to their bets on Fed rate hikes after the inflation report. The dollar was last at 89.032.

• Analysts disagree on the reasons for the dollar’s fall. De Longis argued that the greenback is in a weakening cycle because of the increased supply of dollars in foreign markets and foreign investors’ overweight positions in U.S. fixed income.

• The single currency EUR= was at $1.245, up half a percent from its last close, supported also by stronger-than-expected euro zone industrial production data for December.

• The yen rose to a 15-month high against the dollar at 106.70 JPY= earlier in the day. The Japanese currency was last at 107.03.

• Treasury prices plunged on Wednesday after a spike in U.S. consumer prices in January raised expectations the Federal Reserve may quicken the pace of interest rate hikes, while global stocks rallied as investors took inflation in stride.

The yield on the 10-year Treasury note jumped to 2.92 percent, its highest level since January 2014, and slightly above the levels that sparked a stock-market sell-off earlier in the month. The move higher came after the government reported inflation in January rose by more than expected.

As of the the latest reading, the 10-year yield remained roughly 8 basis points higher at 2.913 percent at 3:49 p.m. ET, while the yield on the 30-year bond rose to 3.174 percent. Bond yields move inversely to their prices.

• The report increased the likelihood that the Fed will raise rates when policy-makers meet March 20-21 - even as U.S. retail sales posted their largest decline in 11 months.

The odds of a March rate hike rose 7 percentage points to 83.1 percent, according to the CME Group’s FedWatch tool.

• The Labor Department said its Consumer Price Index increased 0.5 percent last month as households paid more for gasoline, rental accommodation and healthcare. The CPI rose 0.2 percent in December. The year-on-year increase in the CPI was unchanged at 2.1 percent in January as the large price gains from last year dropped out of the calculation.

Excluding the volatile food and energy components, the CPI shot up 0.3 percent. That was the largest increase since January 2017 and followed a 0.2 percent rise in December. The year-on-year rise in the so-called core CPI was unchanged at 1.8 percent in January. Economists had forecast the CPI increasing 0.3 percent in January and the core CPI rising 0.2 percent.

The core CPI is viewed as a better measure of underlying inflation trends. The Fed tracks a different index, the personal consumption expenditures price index excluding food and energy, which has consistently undershot the central bank’s 2percent target since mid-2012.

• A weakening dollar is also expected to put pressure on inflation. Rising inflation could hurt consumer spending, which is already showing signs of slowing. A separate report from the Commerce Department on Wednesday showed retail sales fell 0.3 percent in January, the largest decline since February 2017, after being unchanged in December.

The weak retail sales and stronger inflation prompted the Atlanta Fed to slash its first-quarter gross domestic product growth estimate by 0.8 percentage point to a 3.2 percent annualized rate. The economy grew at a 2.6 percent pace in the fourth quarter.

• On the day Jacob Zuma finally caved to pressure to quit as South African president, he ranted to the state broadcaster for an hour about the ill treatment he had received at the hands of the party he had served since his teenage years.

• Oil prices rallied on Wednesday, shaking off earlier weakness as U.S. crude stocks rose less than expected and Saudi Energy Minister Khalid al-Falih said major oil producers would prefer tighter markets than end supply cuts too early.

Brent crude futures LCOc1 settled up $1.64 a barrel, or 2.6 percent, to $64.36 a barrel. U.S. West Texas Intermediate crude futures CLc1 gained $1.41, or 2.4 percent, to $60.60 a barrel.

Reference: Reuters, CNBC