Dollar pinned down by lower U.S. yields; inflation data in focus
The dollar languished near 2-1/2-week lows against major peers on Monday as a decline in Treasury yields restrained the U.S. currency.
The British pound sank toward a two-month low, continuing its decline from a nearly three-year high reached in February, with analysts pointing to blood clot concerns around the AstraZeneca vaccine, which the U.K. has relied heavily on for its aggressive vaccination programme.
Bitcoin traded above $60,000, closing the gap to its record high.
Both the dollar and Treasury yields are taking something of a breather after scaling multi-month peaks at the end of last month, powered by bets that an accelerating U.S. recovery from the pandemic will lift inflation faster than Federal Reserve policymakers anticipate.
While the Fed’s repeated insistence that near-term price pressures will prove transitory has soothed investors this month, the dollar firmed on Friday following stronger-than-expected producer price data, taking the edge off the currency’s worst week this year.
The dollar index, which tracks the greenback against a basket of six rivals, was little changed at 92.304 in Asia, following a 0.9% slump last week. It dipped below 92 on Thursday for the first time since March 23.
The benchmark 10-year Treasury yield was at 1.6622% after dropping as low as 1.6170% last week. It had surged to a more than one-year high of 1.7760% on March 30.
Data on Friday showed the largest annual gain in 9-1/2 years for U.S. producer prices, backing expectations for higher inflation as the economy reopens amid an improved public health environment and massive government funding.
U.S. consumer price data will be released Tuesday.
Fed Chair Jerome Powell speaks on Wednesday at the Economic Club of Washington. In an interview on Sunday on CBS’s “60 Minutes,” Powell said the U.S. economy is at an “inflection point” with expectations that growth and hiring will pick up speed in the months ahead, but he also warned of risks stemming from a hasty reopening.
Against the euro, the dollar hovered near the lowest since March 23 at $1.1901. It bought 109.66 yen, close to a two-week low below 109 reached on Thursday.
The dollar can lift back toward 110 yen, while the euro has scope to retrace most of that recent gains from its almost five-month low near $1.17, she said.
The British pound slipped 0.2% to $1.36745, nearing Friday’s low of $1.3670, a level not seen since Feb. 8.
Bitcoin traded at $60,102.69 after rising as high as $61,222.22 over the weekend, approaching the record peak of $61,781.83 set one month ago.
Miners have not been selling recently minted tokens at a time of greater demand from corporations and investors, according to Justin d’Anethan, sales manager at digital asset company Diginex in Hong Kong.
· Analysis: Big U.S. Treasury auctions could restart rise in yields
U.S. Treasury auctions offering $271 billion of new debt and a key inflation report this week could end a recent lull in the bond market, reigniting a rise in yields that worried investors in the first quarter.
Investors said weak demand at upcoming auctions, which kick off on Monday, could send bond prices lower and yields higher, albeit at a slower pace than in the first quarter.
· The Week That Was: JPM’s Jamie Dimon sees economic boom that could last into 2023
· Amid uncertainties of global COVID-19 fight, China should hold strong: Global Times editorial
· Global Covid-19 caseload tops 135.8 million: Johns Hopkins
· India's coronavirus tally overtakes Brazil; thousands join ritual bath
India reported a record daily tally of 168,912 COVID-19 infections on Monday, the world’s highest, while worries grew over a further spike, as hundreds of thousands of devotees gathered for a ritual bath in the Ganges river.
· Japan begins COVID-19 shots for over 65s as fourth infection wave looms
· Australia abandons COVID-19 vaccination targets after new advice on AstraZeneca shots
· Biden declares South Korean battery maker deal a win for U.S. electric vehicle production
· Bank of America sees South Korea and Taiwan sustain their chip dominance
Kathleen Oh of Bank of America Securities expresses confidence that South Korea and Taiwan will “maintain their supremacy” in semiconductor manufacturing capacity.
· China's exports, imports seen staying buoyant in March: Reuters poll
Improved global demand and a favorable base effect are likely to have kept China’s exports buoyant in March, while higher oil prices will have been boosted its imports, a Reuters poll showed on Monday.
China’s trade surplus is expected to be $52.05 billion in March, following a surplus of $103.25 billion in the first two months of the year, according to a median forecast in a Reuters poll of 27 economists. The data will be released on Tuesday.
Exports are expected to have risen 35.5% in March from a year earlier, according to the poll. The number was down from 60.6% jump in January-February, as the year-ago level suffered a deeper contraction as the the coronavirus outbreak in China passed through its peak.
The rebound of overseas demand for Chinese goods continued with the recovery of global economy amid greater vaccination efforts. Surveys showed U.S. factory activity picked up in March amid strong growth in new orders, and the growth in Euro zone monthly factory activity was the fastest on record.
· Japan wholesale prices rise for first time in 13 months as global recovery boosts commodity costs
Japanese wholesale prices marked their first annual increase in more than a year in March, data showed on Monday, a sign that rising commodities costs are pinching corporate margins, adding inflationary pressure to the world’s third-largest economy.
Analysts, however, expect such pressures to remain more modest in Japan than in the United States, as slow rollouts of vaccines to combat the coronavirus pandemic are seen weighing on Japanese domestic consumption.
The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, rose 1.0% in March from a year earlier, Bank of Japan (BOJ) data showed, the first rise in 13 months.
· Japan bank lending rises again as pandemic pressures services sector
· NZ's cenbank to stand pat as it assesses travel resumption, property curbs: Reuters poll
New Zealand’s central bank is expected to leave interest rates and its quantitative easing programme unchanged this week as it assesses the economic impact of some international tourists returning and the government’s new housing market measures.
· Blinken warns of China's 'increasingly aggressive actions' against Taiwan
U.S. Secretary of State Antony Blinken said on Sunday the United States is concerned about China’s aggressive actions against Taiwan and warned it would be a “serious mistake” for anyone to try to change the status quo in the Western Pacific by force.
· Iran's Zarif blames Israel for Natanz incident, vows revenge: TV
Iran blames its regional arch-foe Israel for Sunday’s incident at the Natanz nuclear site and will take its revenge, state TV quoted Foreign Minister Mohammad Javad Zarif as saying on Monday.
Iranian authorities described the incident a day earlier as an act of “nuclear terrorism” and said Tehran reserves the right to take action against the perpetrators.
· Myanmar activists call for New Year defiance; Suu Kyi due for video hearing
Opponents of Myanmar’s coup called on Monday for people to show defiance of the military with costumes and prayers over the upcoming new year holiday, hoping to maintain the momentum of their campaign in which more than 700 people have been killed.
The holiday runs from April 13 to April 17, which is New Year’s Day.
Security forces have killed 706 protesters, including 46 children, since the military seized power from the elected government of Aung San Suu Kyi in a Feb. 1 coup, according to a tally by the Assistance Association for Political Prisoners (AAPP) activist group.
· Oil prices climb on favorable outlook for U.S. fuel demand
Oil was little changed on Monday amid hopes that fuel demand is picking up in the U.S. as the summer driving season approaches and COVID-19 vaccinations there accelerate, although rising case numbers in other countries are keeping a lid on prices.
Brent was up 2 cents at $62.97 a barrel by 0510 GMT, having risen to as high as $63.30. U.S. crude gained 1 cent to $59.49 a barrel, after rising as much as 46 cents earlier.
Prices have changed little since a period of volatile trading ended last Monday.
While the United States has fully vaccinated more than 70 million people, and in Europe new infection numbers are falling as lockdowns take effect, India is reporting record new cases and other parts of Asia are seeing caseloads rise.
That is likely to continue to keep a lid on any revival of global travel and keep prices rangebound as the summer approaches, analysts and traders said.
Reference: CNBC, Reuters, Global Times
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