Dollar dips before consumer price inflation data

The dollar index fell 0.04 per cent against a basket of currencies to 92.164. It is holding above a three-week low of 91.995 reached on Thursday. — Reuters pic
The dollar index fell 0.04 per cent against a basket of currencies to 92.164. It is holding above a three-week low of 91.995 reached on Thursday. — Reuters pic

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NEW YORK, April 13 — The dollar dipped slightly yesterday as traders awaited highly anticipated US inflation and retail sales data in coming days, and as the Treasury Department saw solid demand for new sales of three-year and 10-year notes.

The dollar has rebounded this year as US Treasury yields rise on expectations of faster economic growth and higher inflation.

US consumer price data for March due today is a major economic focus. Investors are betting that price pressures will increase due to increased fiscal and monetary stimulus and as businesses reopen from Covid-19 related closures.

Comparisons with last year are also likely to be strong, due to a drop in inflation a year ago when businesses closed due to the spread of the virus.

“With US data expected to come in strong this week, we believe the dollar’s rise can continue,” analysts at Brown Brothers Harriman said in a report yesterday.

Retail sales data for March is due on Thursday.

The dollar index fell 0.04 per cent against a basket of currencies to 92.164. It is holding above a three-week low of 91.995 reached on Thursday.

The euro was little changed on the day at US$1.1900 (RM4.92).

Treasury yields dipped from session highs but were higher on the day before the Treasury will sell 30-year bonds today, and after yesterday’s auctions saw good demand.

Federal Reserve Chairman Jerome Powell said on Sunday that the US economy was at “an inflection point” and looked set for a strong rebound in the coming months, but he also warned of risks stemming from a hasty reopening.

Boston Fed President Eric Rosengren also said yesterday that the US economy could see a significant rebound this year thanks to accommodative monetary and fiscal policy, though the labour market still has much room for improvement.

Bitcoin chopped around the US$60,000 level on Monday and is holding just below a record high of US$61,782 reached last month.

Sterling rose 0.22 per cent to US$1.3724 as traders cheered the latest phase of the British government’s economic reopening plan.

The dollar fell 0.19 per cent to 109.44 yen versus the Japanese currency.

US dollar net short positions have fallen to their lowest in nearly three years, according to data published on Friday.

ING analysts noted that speculators had cut their net short dollar positions for the 12th consecutive week, which could prove a headwind for further dollar gains.

“At this stage, the dollar has lost all its positioning ‘advantage,’ having a neutral speculative positioning, which suggests we should no longer see dollar rallies against most G10 currencies exacerbated by the unwinding of USD shorts,” they wrote. — Reuters

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