{"id":109189,"date":"2021-03-10T16:41:09","date_gmt":"2021-03-10T16:41:09","guid":{"rendered":"https:\/\/fin2me.com\/?p=109189"},"modified":"2021-03-10T16:41:09","modified_gmt":"2021-03-10T16:41:09","slug":"dollar-edges-higher-shaking-off-tame-u-s-inflation-report","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/dollar-edges-higher-shaking-off-tame-u-s-inflation-report\/","title":{"rendered":"Dollar edges higher, shaking off tame U.S. inflation report"},"content":{"rendered":"

NEW YORK (Reuters) – The dollar ticked higher on Wednesday, rebounding from a slight dip after a tame U.S. inflation report, while traders looked to an auction of U.S. 10-year Treasury bonds later in the day that could spark volatility in currency markets.<\/p>

FILE PHOTO: U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul February 7, 2011. REUTERS\/Lee Jae-Won\/File Photo<\/figcaption>

U.S. consumer prices posted their biggest annual gain in a year, though underlying inflation remained tepid amid sluggish demand for services like airline travel, the data showed.<\/p>\n

The move was largely inline with economists\u2019 expectations, though core inflation rose 0.1%, versus market forecasts of a 0.2% rise.<\/p>\n

U.S. Treasury yields backtracked slightly following the data, as market participants had hoped for a more upbeat outlook on consumer prices.<\/p>\n

The dollar index has closely tracked a surge in Treasury yields this year, both because higher yields increase the currency\u2019s appeal and as the bond rout shook investor confidence, spurring demand for safe-haven assets.<\/p>\n

\u201cThe drive of the dollar\u2019s movement since the beginning of the year has been U.S. interest rates and I just don\u2019t see that scenario changing,\u201d said Joseph Trevisani, senior analyst at FXSTREET.COM.<\/p>\n

The greenback will likely trend higher through mid-year as the economic recovery gains steam, he said.<\/p>\n

The dollar index was up 0.026% at 92.022, having edged lower earlier in the session following the CPI numbers.<\/p>\n

Bond yields could rise further this week as the market digests a $120 billion auction of 3-, 10-, and 30-year Treasuries.<\/p>\n

The 10-year auction today is the main risk to market sentiment, followed by a 30-year auction on Thursday, as low demand could reinstate pressure on U.S. Treasuries, ING strategists said in a daily note.<\/p>\n

\u201cEqually, a good take-up could reiterate the risk-friendly mood in FX markets observed yesterday. Hence, one should get ready for a day of volatility with the FX market looking for signs of confirmation as to whether the risk rally yesterday was a short-term blip or the tentative start of a trend.\u201d<\/p>\n

Riskier currencies including the Australian and New Zealand dollars edged lower after logging big gains on Tuesday on rising prospects for the global economic recovery.<\/p>\n

U.S. President Joe Biden is expected to sign a $1.9 trillion coronavirus aid package as soon as this week.<\/p>\n

The euro was down 0.06% at $1.18915 ahead of a meeting of the European Central Bank on Thursday.<\/p>\n

One topic is expected to dominate the ECB meeting: what to do about rising sovereign bond yields, which if left unchecked could derail efforts to get the coronavirus-hit economy back on track.<\/p>\n

\u201cAlthough the recent move in bond yields has not spared the euro zone, the tightening in financial conditions has been far less of a problem for the ECB given the different nominal starting point,\u201d said Geoff Yu, EMEA market strategist at Bank of New York Mellon.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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