The dollar started a week full of big economic data, relatively stable, and investors are wary of whether the Federal Reserve will begin to withdraw from the policy of super-support, even in cases of increasing coronavirus infections.
The dollar ended its best three-week week on Friday, gaining about 0.6% against the euro as it took advantage of both safe heavens and policy prospects boosting US yields. government securities.
He kept his gains at the start of the Asian session to keep the Eurocross at $ 1.1810. He was also stable at 109.91 Japanese yen, while his strength has so far stopped the rally in Australian and New Zealand dollars.
In the morning trade, the Australians were slightly more stable at $ 0.7362, but struggled to stay above $ 0.74. The Kiwi was slightly weaker at $ 0.7115, but is also struggling to get out of the monthly range despite the New Zealand Reserve Bank preparing to raise interest rates.
“Several dynamics favor the dollar,” said Rodrigo Catril, a senior currency strategist at the Australian National Bank in Sydney, especially rejecting the risk, as even vaccinated countries such as Singapore and Britain have seen a jump in COVID-19 cases.
“The reopening still faces challenges on the part of the cautious consumer and obstacles that limit the economy’s ability to recover with some certainty,” he said.
“At the same time, growing infections suggest that we may still need to reintroduce some restrictions. The other is that the Federal Reserve continues to signal a reduction.”
US consumer price data on Tuesday is expected to show a slight reduction in core inflation to 4.2%.
Ten-year government securities were sold for the third week in a row last week – the longest curve since yields rose higher in February and March – raising 10-year yields to 1.3462%.
“My baseline forecast is to still have inflation around 4% this year and then start falling back to 2% in 2022 and 2023. However, I see an increased risk that inflation could rise” , says Harker told Nikkei.
“I’d like to start the QE reduction process soon so we can complete this process so that if we need to raise interest rates, we can do that. And I think we need to buy this option. “
Also ahead of the calendar are Chinese economic data, which is likely to highlight Wednesday’s volatile retail sales and further add to concerns about the world’s second-largest economy.
The yuan was stable at 6.4424 per dollar in offshore trading. Elsewhere, sterling stood at $ 1.3834, and cryptocurrencies Bitcoin and eth were generally stable at around $ 46,000.
Junior Trader Nikolay Yordanov