Dollar pinned near two-week troughs amid lower U.S. yields

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TOKYO — The U.S. dollar traded near more

than two-week troughs versus major peers on Thursday, tracking

Treasury yields lower, after minutes of the Federal Reserve’s

March policy meeting offered no new catalysts to dictate market

direction.

Fed officials remained cautious about the risks of the

pandemic – even as the U.S. recovery gathered steam amid massive

stimulus – and committed to pouring on monetary policy support

until a rebound was more secure, the minutes showed Wednesday.

Fed Chair Jerome Powell will speak at a virtual

International Monetary Fund conference later on Thursday.

The dollar index which measures the greenback against

a basket of six currencies, edged lower to 92.371 in the Asian

session, after dipping to as low as 92.134 on Wednesday for the

first time since March 23.

The gauge rallied to an almost five-month high of 93.439 at

the end of last month as the U.S. pandemic recovery outpaced

most other developed nations, particularly Europe.

“Hard to argue that the U.S. macro outperformance trade is

exhausted; the strong vaccine drive, reopening and stimulus set

to produce some exceptionally strong rebound data in the next

several months,” Westpac strategists wrote in a report,

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forecasting a run at 94.5 for the dollar index, also known as

DXY.

“Admittedly though, the next DXY upleg may take a few weeks

before it develops momentum – a lot of good news is priced in.”

The benchmark 10-year Treasury yield was around

1.67% on Thursday, after dipping below 1.63% overnight. It hit a

more than one-year top of 1.776% late last month.

The S&P 500 eked out a modest gain on Wednesday,

moving mainly sideways since surging to a record high to start

the week.

The chief currency strategist at Citigroup Global Markets

Japan, Osamu Takashima, said that the market’s direction is

difficult to call, but expects the next move for the greenback

to be lower.

“Current market sentiment is mild risk-on, and under such

circumstances the dollar will weaken gradually – but no big

moves,” he said.

The retreat in U.S. yields has also removed a driver for

dollar gains, he added.

The dollar weakened slightly to 109.66 yen,

consolidating after its retreat from a more than one-year high

of 110.97 reached on March 31.

The euro was almost unchanged from Wednesday at

$1.18715, after rebounding from the almost five-month low of

$1.1704 touched on March 31.

“The vaccination progress in the Eurozone is significantly

lagging that of the U.S., and coronavirus infection rates in the

Eurozone are on the rise again,” Commonwealth Bank of Australia

strategist Joseph Capurso wrote in a client note.

“As such, EUR/USD is vulnerable to a move lower towards

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1.1700 in the near-term.”

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Currency bid prices at 518 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.1874 $1.1873 +0.02% -2.81% +1.1876 +1.1861

Dollar/Yen 109.6750 109.7750 -0.09% +6.18% +109.8950 +109.6750

Euro/Yen 130.23 130.37 -0.11% +2.61% +130.4700 +130.1600

Dollar/Swiss 0.9291 0.9297 -0.04% +5.04% +0.9302 +0.9293

Sterling/Dollar 1.3760 1.3740 +0.15% +0.72% +1.3767 +1.3734

Dollar/Canadian 1.2603 1.2607 -0.03% -1.02% +1.2627 +1.2603

Aussie/Dollar 0.7633 0.7612 +0.25% -0.80% +0.7635 +0.7603

NZ 0.7028 0.7014 +0.20% -2.13% +0.7030 +0.7005

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Kevin Buckland; Editing by Stephen Coates and Kim

Coghill)