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The dollar rallies with US yields awaiting the Fed and Biden speech

Por Saikat Chatterjee

LONDON, Apr 28 (Reuters) – The U.S. dollar rose on Wednesday, as investors largely waited for the U.S. Federal Reserve’s statement on monetary strategy and, later, a speech by Joe Biden , in which the US president will announce more stimulus plans.

Although the greenback has recovered from a month-long low reached earlier this week, investors expect the US central bank to maintain its position and Fed Chairman Jerome Powell is seen as likely to repeat his message in favor of monetary relaxation.

The dollar index rose 0.2% to 91.047, rebounding from Monday’s low of 90.679, its lowest since March 3, though investors don’t seem convinced the recent downward trend is over.

Greenback gains were also bolstered by rising US Treasury yields, with benchmark yields on 10-year notes rising above 1.60% following tepid auction results. [US/]

Investor inflation expectations, measured by US inflation-linked bonds, rose above 2.40% on Tuesday, their highest level since 2013.

However, analysts expect the Fed to remain unfazed by the prospects for more stimulus plans and rising inflation expectations, holding out for further losses for the greenback in the coming weeks.

“We still expect Powell to continue to show an ultra-lax monetary stance and emphasize the long period ahead in which the Fed plans to maintain a loose monetary policy, which will leave open the prospect of further dollar weakness,” said the strategists of MUFG.

The euro was down 0.2% to $ 1.2070, below Monday’s two-month high of $ 1.2117.

The dollar was at 108.97 yen, having risen 0.59% overnight and extending its recovery from a seven-week low of 107.48 hit last week, in parallel with rises in yields on bonds. US bonds.

Biden is expected to come up with a plan to raise taxes on the richest Americans, including the largest ever increase in capital gains taxes, to fund about $ 1 trillion in childcare and other social spending.

On the other hand, the Australian dollar was down 0.3% to $ 0.77415 after the country’s consumer price index came out weaker than expected.

(Information from Saikat Chatterjee; additional information from Hideyuki Sano in Tokyo; edited by Lincoln Feast; translated by Flora Gómez at the Gdansk newsroom)

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