TOKYO- The dollar hovered near a three-week low against major rivals on Tuesday, pressured by lower Treasury yields as traders awaited highly anticipated US inflation data later in the global day.
The greenback has retreated along with US yields this month after surging to multi-month peaks on expectations that massive fiscal stimulus coupled with continued monetary easing will spur faster US economic growth and higher inflation.
Retail sales figures due Thursday will also be closely watched.
Boston Federal Reserve Bank President Eric Rosengren said on Monday that the US economy could see a significant rebound this year thanks to accommodative monetary and fiscal policy, though the labor market still has much room for improvement.
The dollar index, also known as DXY, edged slightly higher to 92.170 early in the Asian session, but still near Thursday’s low of 91.995, which was the weakest since March 23. It had rallied to a nearly five-month high of 93.439 on the last day of March.
“DXY has been slipping in recent days but should find stability with the US macro outperformance narrative set to get a strong airing” in data this week, Westpac strategists wrote in a client note, projecting a rally toward 94.500.
“Treasury issuance is surging at the same time as inflationary pressures show in the data, which should lift the US dollar.”
Westpac expects 10-year Treasury yields to rise toward the top of its recent 1.6-1.755 percent range this week.
The benchmark yield was at 1.6764 percent on Tuesday. It had surged to a more than one-year high of 1.7760 percent on March 30.
