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FOREX-Dollar holds advantage as inflation surprise trips up bears

Published 13/05/2021, 03:13 pm
© Reuters.
EUR/USD
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USD/JPY
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USD/CHF
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NZD/USD
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BARC
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USD/CNY
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US10YT=X
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* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

* Dollar stands tall after strong CPI print

* Traders shift focus on jobless claims and retail sales

* New Zealand dollar briefly gains on reopening hopes

By Stanley White

TOKYO, May 13 (Reuters) - The dollar held gains on Thursday, supported by higher Treasury yields after a surprisingly strong rise in U.S. consumer prices fanned fears about an increase in inflationary pressure.

Traders will now turn attention to U.S. weekly jobless claims due later on Thursday and retail sales numbers on Friday for guidance on whether upward pressure on prices will persist.

The greenback is likely to extend its gains as some investors unwind bearish bets, and re-position in anticipation of sustained inflation pressures as more economies emerge from the coronavirus pandemic, analysts said.

"The move in the dollar was fuelled by the upward surprise in consumer prices, but also because the market was caught on the short side," said Shinichiro Kadota, foreign exchange strategist at Barclays (LON:BARC).

"This market is aware of the potential for further upside surprises to inflation. This will support the dollar."

The dollar traded at 109.69 yen JPY=D3 , close to its strongest level in five weeks.

Against the euro EUR=D3 , the dollar stood at $1.2077, holding onto a 0.6% gain from the previous session.

The British pound GBP=D3 bought $1.4064.

The dollar also traded at 0.9085 Swiss franc CHF=EBS , close to a one-week high.

U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints, data on Wednesday showed. 10-year U.S. Treasury yields US10YT=RR rose to a five-week high of 1.7040%, increasing the appeal of dollar-denominated assets.

Signs of a stronger labour market and increased consumer spending would offer more evidence that inflationary pressure will pick up, which could push yields and the dollar even higher, traders said.

The New Zealand dollar NZD=D3 briefly rose after Prime Minister Jacinda Ardern said she is exploring quarantine-free travel with other countries, but the kiwi gradually gave up those gains amid reluctance to sell the greenback. Australian dollar AUD=D3 also held steady against its U.S. counterpart.

The onshore yuan CNY=CFXS traded at 6.4545 per dollar, extending a pullback from an almost three-year high reached on Monday as overseas-listed Chinese firms bought dollars for dividend payments.

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Currency bid prices at 0500 GMT Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.2077

$1.2071

+0.06%

-1.15%

+1.2089

+1.2070 Dollar/Yen

JPY=EBS

109.6900

109.7050

-0.01%

+6.20%

+109.7750 +109.5000 Euro/Yen

132.40

+0.05%

+4.37%

+132.5300 +132.3300

S>

Dollar/Swiss

CHF=EBS

0.9085

0.9089

-0.01%

+2.72%

+0.9092

+0.9079 Sterling/Dollar GBP=D3

1.4064

1.4055

+0.05%

+2.93%

+1.4077

+1.4054 Dollar/Canadian CAD=D3

1.2118

1.2135

-0.13%

-4.83%

+1.2133

+1.2104 Aussie/Dollar

AUD=D3

0.7724

0.7726

-0.03%

+0.40%

+0.7746

+0.7717 NZ

NZD=D3

0.7165

0.7161

+0.09%

-0.19%

+0.7178

+0.7155 Dollar/Dollar

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates

https://tmsnrt.rs/2RBWI5E

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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