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Dollar ends mixed after intra-day bounce in tandem with U.S. treasury yields
The greenback rebounded in tandem with rise in U.S. yiedls after upbeat U.S. inflation data but later pared gains on intra-day retreat in U.S. yields and ended the day mixed against majority of its peers.
On the data front, Reuters reported U.S. producer prices increased more than expected in March, resulting in the largest annual gain in 9-1/2 years, fitting in with expectations for higher inflation as the economy reopens amid an improved public health environment and massive government funding.
The producer price index for final demand jumped 1.0% last month after increasing 0.5% in February, the Labor Department said on Friday. In the 12 months through March, the PPI surged 4.2%. That was the biggest year-on-year rise since September 2011 and followed a 2.8% advance in February. Economists called by Reuters had forecast the PPI increasing 0.5% in March and jumping 3.8% year-on-year. The report was delayed after the Bureau of Labor Statistics’ website crashed.
Versus the Japanese yen, the greenback found renewed buying at 109.21 in Asia and rallied to 109.74 in European morning, then to +session highs of 109.95+ at New York open on rise in U.S. Treasury yields together with broad-based usd’s strength before retreating to 109.56 in tandem with U.S. yields, price last traded at 109.65 near the close.
The single currency initially fell from 1.1920 in Asia to 1.1886 at European open before ratcheting lower to +session lows of 1.1868 at New York open due to broad-based usd’s strength on jump in U.S. yields. The pair then rebounded to 1.1909 in New York afternoon session on short-covering.
The British pound met renewed selling at 1.3751 in Asia and tumbled to a 2-month low at 1.3670 at European open due to cross-selling in sterling especially vs euro together with usd’s broad-based strength before staging a rebound to 1.3744 in New York morning on short-covering, price last traded at 1.3996 near the close.
In other news, Reuters reported citing his concerns about excess risk-taking in financial markets and potential inflation, Dallas Federal Reserve Bank President Robert Kaplan said Friday he will push for reducing the Fed’s support for the economy sooner than later. “You don’t want to be preemptive, but I also don’t want to be so reactive that we are late,” Kaplan said in a virtual appearance at the Engage Undergraduate Investment Conference. Once the pandemic is weathered, and it is clear there has been progress toward full employment and 2% inflation, he “will advocate” for pulling back on “some of the Fed’s extraordinary actions,” starting with trimming the Fed’s bond-buying program.
Data to be released this week:
Japan corporate goods price, machinery orders, EU retail sales, U.S. Federal Budget on Monday.
New Zealand retail sales, Australia NAB business conditions, NAB business confidence, U.K. BRC retail sales, GDP, Industrial output, manufacturing output, construction output, trade balance, Italy industrial output, Germany ZEW economic sentiment, ZEW current conditions, EU ZEW survey expectation, U.S. core CPI, CPI, redbook on Tuesday.
Japan machinery orders, China exports, trade balance, Australia consumer sentiment, New Zealand RBNZ interest rate decision, EU industrial production, U.S. MBA mortgage app, import prices, export prices on Wednesday.
New Zealand food price index, Australia consumer inflation experience, employment change, unemployment rate, Germany CPI, HICP, wholesale price index, France CPI, Italy CPI, U.S. NY Fed manufacturing, initial jobless claims, continuous jobless claims, Philly Fed manufacturing index, retail sales, industrial production, capacity utilization, manufacturing output, business inventories, NAHB housing market index, Canada manufacturing sales, ADP employment change on Thursday.
New Zealand manufacturing PMI, China housing prices, industrial output, retail sales, Swiss producer/import price, Italy trade balance, EU trade balance, HICP, U.S. building permits, housing starts, U. Mich. sentiment, Canada wholesale trade on Friday.