U.S. Dollar Fell Due to Treasury Yields

The dollar declined on Monday as Treasury yields were waning and investors looked ahead to central bank meetings on both sides of the Atlantic ocean. 

U.S. jobs data affected the dollar, as investors bet that jobs growth was not robust enough to raise expectations for the Federal Reserve to tighten its monetary policy. That tendency continued on Monday. The Treasury bonds remained subdued after Friday’s decline, reducing demand for the greenback. 

Analysts and investors are also waiting for the U.S. inflation data as well as the European Central Bank (ECB) meeting. Rhetoric from ECB policymakers suggests the central bank is not in a hurry to slow the pace of buying under the $2.24 trillion Pandemic Emergency Purchase Program (PEPP). 

Treasury yields edged slightly higher in the session but remained well below levels seen before the employment report. This factor was likely the driver of USD weakness on Monday. 

Benchmark 10-year Treasury yields stood at 1.569%. 

The dollar index fell 0.21% at 89.946. The euro added 0.23% to $1.2194. 

The greenback also declined against the Japanese yen. It fell 0.23% to 109.26 yen. The Australian dollar which is regarded as a proxy for risk appetite gained 0.22% versus the U.S. dollar at 0.776.

Dollar on Tuesday

The U.S. dollar found a bit of support one day later on Tuesday, as investors prepared for the inflation data following weaker-than-expected jobs data. It eased concerns about an early tapering of the Federal Reserve’s monetary stimulus. 

The single currency fell marginally, weakened by the dollar’s strength. The data regarding German industrial production in April also had a negative impact on the euro. 

Currency markets were generally in a holding pattern ahead of the ECB meeting. Another factor is the U.S. inflation numbers also due on Thursday.

The dollar index gained 0.1% to 90.105, while against the euro, the greenback was up 0.1% higher at $1.2174. The British pound dropped 0.2% to $1.4147 and the Australian dollar fell 0.2% to $0.7742.

The Japanese yen fell as the greenback rose, fetching 109.48 yen per dollar, down 0.2% on the day. 

Cryptocurrencies declined but trading was generally calm. Bitcoin earlier fell to a three-week low of $32,418, while ether dropped 4%. It declined to a week-low of $2,431.93.