FOREX-Dollar holds gains as inflation fears boost yields

  • Reuters
  • Forex News
FOREX-Dollar holds gains as inflation fears boost yields
Credit: © Reuters.

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

* Dollar stands tall after strong CPI print

* Higher Treasury yields increase dollar's appeal

* Traders shift focus on jobless claims and retail sales

By Stanley White

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

Traders will now turn their attention to U.S. weekly jobless claims due later on Thursday and retail sales numbers on Friday to determine whether consumer prices will continue to rise.

The greenback is likely to continue to rise as some investors unwind bearish bets on the currency and reposition for more sustained inflation as more countries leave behind 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 bought 109.55 yen JPY=D3 , close to its strongest level in five weeks.

Against the euro EUR=D3 , the dollar stood at $1.2083, holding onto a 0.6% gain from the previous session.

The British pound GBP=D3 bought $1.4068.

The dollar also rose to 0.9083 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%, which increases the appeal of holding dollar-denominated assets.

Signs of 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.

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Currency bid prices at 0053 GMT Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.2083

$1.2071

+0.10%

-1.10%

+1.2084

+1.2070 Dollar/Yen

JPY=EBS

109.5500

109.7050

-0.14%

+6.07%

+109.7750 +109.5550 Euro/Yen

132.40

-0.03%

+4.29%

+132.5300 +132.3700

S>

Dollar/Swiss

CHF=EBS

0.9083

0.9089

-0.06%

+2.68%

+0.9092

+0.9084 Sterling/Dollar GBP=D3

1.4068

1.4055

+0.11%

+2.99%

+1.4070

+1.4054 Dollar/Canadian CAD=D3

1.2113

1.2135

-0.16%

-4.86%

+1.2133

+1.2114 Aussie/Dollar

AUD=D3

0.7732

0.7726

+0.10%

+0.53%

+0.7735

+0.7718 NZ

NZD=D3

0.7171

0.7161

+0.16%

-0.13%

+0.7172

+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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