SINGAPORE- The dollar was firm but sluggish in Asian trading on Monday as investors looked ahead to US inflation data after the big payrolls number last week, and as Treasury yields reached for December highs.
US consumer price inflation for March on Wednesday and a European Central Bank (ECB) policy meeting on Thursday will be the main economic markers for the big global currencies this week.
Those follow a week of vacillation as traders watched Japanese authorities talk their currency higher, and as US services, the closely watched employment report on Friday and a bunch of Federal Reserve speakers sent mixed signals on rates.
The dollar was just marginally higher, with the Swiss franc, Canadian dollar and Japan’s yen the main losers among the six currencies in the dollar’s trade-weighted index.
The dollar “can remain supported this week if the US CPI for March remains solid as we expect,” analysts at Commonwealth Bank of Australia said.
In the United States, a tight job market and limited progress on inflation in the last couple of months have amplified calls among top officials, including Fed Chair Jerome Powell, to be “patient” as they approach the decision on when to cut rates.
The March consumer price index is key for market participants seeking evidence that factors that made inflation accelerate more than expected at the start of the year are abating.
Yields on US debt have meanwhile pushed higher. At the short end of the curve, the two-year yield, which reflects interest rate move expectations, hit 4.7820 percent , the highest since Nov. 28
Following the jobs data, the US rate futures market has reduced the odds of a June rate cut to 50 percent , down from 66 percent late on Thursday, the CME’s FedWatch tool showed.
