Dollar bounces higher as traders brace for inflation data By Reuters

By Tommy Wilkes

LONDON (Reuters) – The dollar gained ground on Monday after falling last week as traders assessed the outlook for Treasuries yields, pending crucial data on inflation and US retail sales. United in the coming days.

Elsewhere, it was a quiet start to a data-rich week for forex markets.

The euro fell back below $ 1.19 while the British pound briefly fell to its lowest level in two months, with some analysts citing blood clot issues around AstraZeneca’s (NASDAQ 🙂 COVID-19 vaccine, on which the UK relied heavily on for its aggressive vaccination. program.

The fortunes of the dollar have been linked to the performance of treasury bill yields for much of 2021, after concerns about rising U.S. inflation and a stimulus-fueled economic rebound sparked a rise significant US government bond yields in February.

A cut in U.S. rates last week triggered the dollar’s worst week in 2021, but the currency regained some stability on Monday.

Federal Reserve Chairman Jerome Powell said in an interview with US media published on Sunday that the US economy was at “an inflection point” and appeared poised for a strong rebound in the months to come, but he also warned of the risks arising from a hasty reopening.

Investors are now awaiting the March US inflation data due Tuesday.

“We are about to see the first evidence of the much anticipated spike in inflation that is widely expected over the next few months, as the base effects of a year ago begin to take effect as the sharp post-COVID declines are starting to fall outside of the annual calculations, ”MUFG analysts said.

According to them, the fortunes of the dollar may well “remain linked to 10-year yields”.

The benchmark was at 1.6462% after falling to 1.6170% last week. It had reached a more than one year high of 1.7760% on March 30.

The, which measures the greenback against a basket of currencies, rose 0.1% to 92.275 while the euro fell 0.2% to $ 1.1875.

traded above $ 60,000, closing the gap to its all-time high.

Against the pound, the dollar first gained before reversing. The British currency was last up 0.2% to $ 1.3734 after briefly touching a two-month low at $ 1.3669.

The dollar fell 0.2% to 109.41 yen against the Japanese currency.

“The USD has some upside potential this week,” Kimberley Mundy, Commonwealth Bank of Australia (OTC 🙂 strategist, wrote in a report.

“Strong US economic data will highlight the divergence between the rapid economic recovery in the United States and the more delayed recoveries in other developed economies.

The dollar may move up towards 110 yen, while the euro has the opportunity to trace most recent gains from its nearly five-month low near $ 1.17, she said.