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The dollar is constrained by lower US yields, inflation data is the focus of Reuters


Β© Reuters. One dollar banknotes are shown in this illustration

By Kevin Buckland

TOKYO (Reuters) – The dollar weakened near a 2-1 / 2-week low against major currencies on Monday as falling Treasury yields held back the US currency.

Both the greenback and bond yields are slipping slightly after rising to a multi-month high late last month, thanks to a bet that a rapid recovery by the United States after the pandemic will push inflation faster than anticipated by global investors. Federal Reserve policy-makers.

While the Fed repeatedly emphasized that short-term price pressures would prove to have temporarily calmed investors somewhat, the dollar held steady on Friday following stronger producer price data than expected. ants, surpassed the currency’s worst week this year.

The greenback, which tracks the greenback against a basket of six competitors, was little changed at 92,193 at the start of the Asian session, after falling 0.9% last week. It fell below 92 for the first time on Thursday since March 23.

The benchmark is at 1.6745% after falling to a low of 1,6170% last week. It rose to a more than a year high of 1.7760% on March 30.

National Bank of Australia (OTC πŸ™‚ strategist Tapas Strickland wrote in a client note: β€œThe key to the short-term outlook will be whether yields continue to consolidate around these levels, or move higher. than”.

“The broader theme of the rapid recovery of the US economy thanks to the impressive vaccine deployment continues.”

The data on Friday shows the biggest annual increase in 9-1 / 2 years for US producer prices, supporting higher inflation expectations as the economy reopens amid a medical environment. public sector improved and government funding.

US consumer price data will be released on Tuesday.

Fed Chairman Jerome Powell speaks on Wednesday at Washington’s Economic Club. In a Sunday interview on CBS’s “60 Minutes”, Powell said the US economy is at the “inflection point” with the expectation that growth and recruitment will accelerate in the coming months, but he is also on the lookout. report on risks stemming from the hasty reopening. .

Against the euro, the dollar fluctuated near its lowest level since March 23 at $ 1,1901. It bought 109.66 yen, close to a two-week low below 109 reached on Thursday.

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

“Strong US economic data will highlight the difference between a rapid US economic recovery and a slower recovery in other developed economies.”

The dollar could rebound back to 110 yen, while the euro is likely to recover much of its recent gain from a 5-month low near $ 1.17, she said.

In crypto, bitcoin was trading close to $ 60,000 after rising as high as $ 61,222.22 over the weekend, closing the gap with a record high of $ 61,781.83 set a month ago.

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