© Reuters. FILE PHOTO: FILE PHOTO: A five-dollar Lincoln note seen through a magnifying glass at the Bureau of Engraving and Printing in Washington
LONDON (Reuters) – Dollar rallied higher on Tuesday, supported by rising US Treasury yields, but remains near a three-week low as markets wait for inflation data in the United States States.
The dollar fell so far in April, after rising sharply in the first three months of 2021 on expectations that a combination of monetary stimulus and government spending would cause inflation to spike.
US CPI data for March will arrive at 13:30 GMT and is expected to show a 2.4% increase in inflation.
Market participants will also notice how yields are reacting to the 30-year Treasury auction.
ING strategists wrote in a client note that higher inflation will support higher U.S. yields, which could make the dollar outperform currencies with lower yields. such as yen, Swiss franc and euro.
Inflation data “will continue to fuel a perception that the US economy is starting to overheat and potentially raise concerns that the Fed’s staunch message of loyalty will be increasingly challenged,” ING said know.
At 07:25 GMT, the dollar rose 0.1% against a basket of currencies, on 92.2012 time, escaping from a three-week low.
At 1.6979% for the third consecutive day gain, but still well below the 1.7760% reached on March 30, the highest level in more than a year.
“There is a broad expectation that inflation will rise in the coming months, but there is also a large consensus that this will be a transient phenomenon,” Deutsche bank (DE :), strategist Jim Reid wrote in a note.
Overnight data showed Chinese exports surged in March, with import growth rising to a four-year high, signaling an improvement in global demand.
Asian stock markets are generally positive following the data, but the gains are not much supportive of the currency markets. At the beginning of trading in London, Chinese prices were down 0.1% against the dollar, changing hands at 6.5523.
The euro fell 0.1%, at $ 1.1895. Germany’s ZEW survey on investor sentiment in April will be conducted at 1000 GMT.
The Aussie dollar, considered a loose representation for a risk appetite, was down 0.2% against the US dollar at 0.7609.
On Monday, Australia gave up its goal of vaccinating almost its entire population by the end of 2021.
The New Zealand dollar was also down, down 0.1%. The Reserve Bank of New Zealand will meet on Wednesday and is expected to keep rates unchanged.
Sterling is up 0.1% against the dollar at $ 1.3763. Gross domestic product data showed that the UK economy grew in February as companies prepared to lift the coronavirus lockout for the third time.
Elsewhere, bitcoin was up 1.6% at $ 60,807.77, ahead of Coinbase Global Inc, America’s largest cryptocurrency exchange, listed on the Nasdaq on Wednesday.