U.S. Treasury Yields Helped Boost the Dollar

It is a positive day for the world’s reserve currency, as the U.S. dollar edged higher on April 13, helped by a pick-up in U.S. Treasury yields. Nevertheless, it was still near three-week lows as markets waited for inflation data in the U.S.

The greenback jumped in the first three months of 2021, but the dollar has fallen so far in April. During the first three months, the U.S. currency surged on expectations that a combination of monetary stimulus and government spending would cause inflation to spike.

U.S. CPI data for last month is due at 12:30 GMT. This data is expected to show a rise in inflation to 2.4%. Furthermore, market participants will be paying attention to how yields react to a 30-year Treasury auction.

The higher inflation would support the U.S. yields, which in turn has the potential to cause the dollar to outperform lower-yielding currencies such as the yen, Swiss franc as well as euro. At 07:24 GMT, the greenback was up 0.1% against the basket of currencies at 92.201. It was moving away from the recent three-week lows.

When it came to the 10-year U.S. Treasury yield, it was at 1.6979% for its third consecutive day of gains. Nonetheless, it was still well below the 1.7760% level hit on March 30, which was the highest in more than a year.

Dollar and other important currencies

China’s exports rose last month, with import growth rising to four-year highs, signaling an improvement in global demand. This data helped to boost the Asian stock markets. It proved insufficient to support currency markets. By early London trading, China’s offshore yuan dropped 0.1% against the dollar, changing hands at 6.5523.

The euro declined 0.1% to $1.1895. Other currencies such as Australian and New Zealand dollars also declined on Tuesday. For instance, the Australian dollar dropped 0.2% versus its U.S. currency to 0.7609. This week, the country abandoned its goal to vaccinate nearly all its population by the end of this year. The New Zealand dollar also declined 0.1%.

The British pound reached a better result, as it was up 0.1% against the greenback at $1.3763. The country’s economy grew in February as companies prepared for the lifting of the third coronavirus lockdown.

Elsewhere, the world’s largest cryptocurrency was up 1.6% as it reached $60,807.77. Coinbase Global Inc. which is the U.S. largest cryptocurrency exchange will make stock market history on Wednesday as the first crypto-related company to launch an initial public offering.