TOKYO – The dollar held gains on Thursday, supported by higher Treasury yields after a surprisingly strong rise in US consumer prices fanned fears about an increase in inflationary pressure.
Traders will now turn attention to US weekly jobless claims due later on Thursday and retail sales numbers on Friday for guidance on whether upward pressure on prices will persist.
The greenback is likely to extend its gains as some investors unwind bearish bets, and re-position in anticipation of sustained inflation pressures as more economies emerge from the coronavirus pandemic, analysts said.
“The move in the dollar was fuelled by the upward surprise in consumer prices, but also because the market was caught on the short side,” said Shinichiro Kadota, foreign exchange strategist at Barclays.
“This market is aware of the potential for further upside surprises to inflation. This will support the dollar.”
The dollar traded at 109.69 yen, close to its strongest level in five weeks.
Against the euro, the dollar stood at $1.2077, holding onto a 0.6 percent gain from the previous session.
The British pound bought $1.4064.
The dollar also traded at 0.9085 Swiss franc, close to a one-week high.
US consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints, data on Wednesday showed.
Benchmark 10-year US Treasury yields rose to a five-week high of 1.7040 percent, increasing the appeal of dollar-denominated assets. – Reuters
