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The US dollar rose across all the major currencies as rising inflationary concerns spurred speculation that the Fed may hold back on additional rate cuts. As a result, the strengthened dollar picked up the most against the British Pound as disappointing UK data weighted on the currency, and was followed by the New Zealand dollar as the pair plunged to 0.785. The US dollar appreciated against the Swiss franc as the pair traded in parity, and was followed by the low yielding Yen as the pair reached 101.81. The Canadian and Australian dollar also weakened against the US dollar amid oil prices hitting a new record high of $113.99 a barrel.

Fresh economic data helped to strengthen the US dollar as the Producer Price Index surged to 1.1 percent from 0.3 percent on a monthly basis, while rising to 6.9 percent from 6.4 percent on a yearly basis. However, Core Producer Prices rose to 2.7 percent from 2.4 percent - spurring bullish sentiment for the US dollar as many market participants began to cut bets of another aggressive rate cut by the Fed. Manufacturing activity showed faint signs of recovery as the Empire Manufacturing index rose to 0.6 from minus 22.2, while capital inflows to the US picked up as the Net Long-Term TIC Flows index increased to $72.5B from $57.1B. Amid the better than expected data for the economy, the housing market has yet to show any clear signs of recovery as the NAHB Housing Market index held near the record low for the third consecutive month.

The securities market tumbled lower during the midday session as WaMu reported a $1.14B net loss in the first quarter, but consolidate the losses as State Street posted a 69 percent increase in net income. As a result, the DJIA rose 60.41 points to 12,362.47 points, with 21 of the 30 components advancing. Among the broader indices, the S&P500 picked up 6.11 points to hold at 1,334.43 points, amid 157 stocks falling to a new 52 week low.

Rising inflationary pressures moved many investors out of the safe have of risk free bonds, and led to a huge decline in US Treasury prices. As a result, the benchmark 10-Year yield jumped to 3.598 percent from 3.513, while the 2-Year yield surged to 1.823 percent from 1.762.

Looking ahead, the Consumer Price Index will kick off the morning and will be followed by fresh housing data scheduled for 12:30 GMT. At 13:15 GMT, our focus will be turned to the Industrial Production index as we forecast production to pick up, with the day coming to an end as the Fed releases their Beige Book at 18:00 GMT.