Por Stanley White
TOKYO, May 13 (Reuters) – The dollar held gains on Thursday, supported by rising Treasury yields, after an unexpected sharp rise in US consumer prices fueled fears of a pick-up in pressure. inflationary.
Traders will now pay attention to weekly jobless claims to be released on Thursday and retail sales figures on Friday to see if upward pressure on prices persists.
According to analysts, the dollar is likely to expand its gains as some investors undo their bets to the downside and reposition themselves in anticipation of sustained inflationary pressure, as more economies emerge from the coronavirus pandemic.
“The dollar move was driven by the upward surprise in consumer prices, but also because the market was dominated by short positions (in the dollar),” said Shinichiro Kadota, currency strategist at Barclays.
“This market is aware of the possibility of further upside inflation surprises. This will support the dollar.”
The dollar was trading at 109.69 yen, close to its strongest level in five weeks.
Against the euro, the dollar stood at $ 1.2077, maintaining a 0.6% gain compared to the previous session.
The British pound was trading at $ 1.4064.
The dollar was also trading at 0.9085 Swiss francs, close to a one-week high.
Consumer prices in the United States posted their biggest rise in nearly 12 years in April, as increased demand as the economy reopened offset supply constraints, data showed on Wednesday.
The 10-year US Treasury yield hit a five-week high of 1.7040%, increasing the attractiveness of dollar-denominated assets.
Signs that the labor market is buoyant, coupled with rising consumer spending, would provide further evidence that inflationary pressure will pick up, potentially pushing yields and the dollar even higher, traders say.
The New Zealand dollar rose briefly after Prime Minister Jacinda Ardern said she is exploring opening the country to non-quarantine travel with other countries, but the kiwi gradually gave up those gains amid reluctance to sell the greenback.
The Australian dollar was also stable against its US counterpart.
The terrestrial yuan was trading at 6.4545 to the dollar, amplifying the decline from its nearly three-year high reached on Monday, as overseas-listed Chinese companies bought dollars for dividend payments.
(Reporting by Stanley White; Editing by Sam Holmes and Shri Navaratnam; translated by Flora Gómez in the Gdansk newsroom)