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Dollar inches lower as Treasury yields hold firm

05/17/2021 | 04:02pm EDT
U.S. one dollar and Chinese Yuan are seen in this illustration

NEW YORK (Reuters) - The dollar edged lower on Monday as inflation jitters, exacerbated by record high prices paid in a regional U.S. manufacturing survey, benefited riskier currencies at the greenback's expense.

But the U.S. 10-year Treasury yield was little changed as market participants sought clues regarding the Federal Reserve's tolerance for near- and medium-term inflation.

"Given that since the dollar's sell-off last week it hasn't been able to bounce much, it tells me that the driver is not the foreign currency market but the interest rate market," said Marc Chandler, chief market strategist at Bannockburn Forex in New York. "And without higher interest rates it's hard to see how the dollar gets much traction."

The U.S. Federal Reserve is expected to release the minutes from its April monetary policy on Wednesday, which market participants will scrutinize for clues regarding the central bank's views on current inflation spikes.

"The Fed is still saying they're going to be very patient," Chandler added. "If the U.S. doesn't offer higher interest rates, the dollar bears the burden, and that's where we are now."

The Empire State report from the New York Federal Reserve showed a survey record high of prices paid by manufacturers in New York state as materials producers struggle to keep up with booming demand.

The dollar index was last down 0.14% at 90.157. The euro gained 0.09% to $1.2159 and the dollar fell 0.15% to 109.175 Japanese yen.

As economies re-open for business, resurgent demand combined with supply shortages has put commodity prices on an upward trajectory.

Strengthening crude oil prices boosted the Canadian dollar but the Norwegian crown lost ground against the greenback.

And despite higher metal prices, the Australian dollar also edged lower.

Chandler believes central bank policy is taking the lead in influencing the value of currencies typically sensitive to commodity prices.

Bitcoin dropped to a three-month low after Tesla Inc boss Elon Musk suggested over the weekend that the electric automaker may have already sold some of its holdings in the digital currency.

(Reporting by Stephen Culp; Additonal reporting by Tommy Wilkes in London; editing by Barbara Lewis; Editing by Will Dunham)

By Stephen Culp

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) 0.39% 0.54418 Delayed Quote.-3.69%
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) 0.23% 0.93354 Delayed Quote.-4.93%
AUSTRALIAN DOLLAR / CHINESE YUAN RENMINBI (AUD/CNY) 0.06% 4.907894 Delayed Quote.-2.51%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.10% 0.6354 Delayed Quote.0.46%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) -0.04% 84.04 Delayed Quote.5.28%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) -0.16% 1.07369 Delayed Quote.0.56%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) 0.15% 0.69554 Delayed Quote.1.93%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.09% 0.7583 Delayed Quote.-1.81%
BITCOIN - EURO 3.33% 29138.23 Real-time Quote.19.65%
BITCOIN - UNITED STATES DOLLAR 3.50% 34805.39 Real-time Quote.16.49%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.44% 1.83515 Delayed Quote.4.00%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) -0.24% 1.71572 Delayed Quote.-1.19%
BRITISH POUND / CHINESE YUAN RENMINBI (GBP/CNY) -0.32% 9.012782 Delayed Quote.1.32%
BRITISH POUND / EURO (GBP/EUR) -0.35% 1.1666 Delayed Quote.4.43%
BRITISH POUND / JAPANESE YEN (GBP/JPY) -0.46% 154.33 Delayed Quote.9.38%
BRITISH POUND / NEW ZEALAND DOLLAR (GBP/NZD) -0.63% 1.97195 Delayed Quote.4.54%
BRITISH POUND / SWISS FRANC (GBP/CHF) -0.35% 1.2775 Delayed Quote.5.99%
BRITISH POUND / US DOLLAR (GBP/USD) -0.31% 1.3922 Delayed Quote.2.01%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) 0.20% 0.583203 Delayed Quote.1.21%
CANADIAN DOLLAR / CHINESE YUAN RENMINBI (CAD/CNY) -0.22% 5.2512 Delayed Quote.2.72%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.11% 0.680522 Delayed Quote.5.73%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.30% 89.95 Delayed Quote.10.80%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.18% 0.81107 Delayed Quote.3.44%
EURO / CHINESE YUAN RENMINBI (EUR/CNY) -0.02% 7.7195 Delayed Quote.-2.96%
EURO / US DOLLAR (EUR/USD) 0.01% 1.1931 Delayed Quote.-2.27%
INDIAN RUPEE / BRITISH POUND (INR/GBP) 0.30% 0.00969 Delayed Quote.-3.74%
INDIAN RUPEE / CHINESE YUAN RENMINBI (INR/CNY) -0.07% 0.087264 Delayed Quote.-2.40%
INDIAN RUPEE / EURO (INR/EUR) -0.03% 0.011301 Delayed Quote.0.54%
INDIAN RUPEE / JAPANESE YEN (INR/JPY) -0.09% 1.495528 Delayed Quote.5.36%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.01% 0.013487 Delayed Quote.-1.74%
NEW ZEALAND DOLLAR / JAPANESE YEN (NZD/JPY) 0.05% 78.257 Delayed Quote.4.76%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.16% 0.7057 Delayed Quote.-2.26%
S&P GSCI CORN INDEX 1.06% 453.4571 Delayed Quote.13.84%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.13% 6.4671 Delayed Quote.-0.30%
US DOLLAR / BRITISH POUND (USD/GBP) 0.31% 0.718288 Delayed Quote.-1.97%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) -0.06% 6.4701 Delayed Quote.-0.67%
US DOLLAR / EURO (USD/EUR) -0.01% 0.838153 Delayed Quote.2.32%
US DOLLAR / JAPANESE YEN (USD/JPY) -0.16% 110.83 Delayed Quote.7.23%
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