(Re-enter the correct time zone for CPI data, remove reference to ZEW survey)
LONDON (Reuters) – The dollar rose on Tuesday, helped by a rise in US Treasury yields, but was still close to three-week lows as markets awaited inflation data in the United States.
The dollar has fallen so far in April, after rising in the first three months of 2021 with expectations that a combination of monetary stimulus and government spending would lead to rising inflation.
US CPI data for March is due at 12:30 GMT and inflation is expected to rise to 2.4%.
Market participants will also be on the lookout for how yields react to a 30-year Treasury auction.
ING strategists wrote in a note to clients that higher inflation would support higher yields in the United States, which in turn could cause the dollar to outperform lower-yielding currencies such as the yen, the Swiss franc and the euro.
Inflation data “should further fuel the narrative that the U.S. economy is beginning to heat up and is likely to add to concerns that the Fed’s firmly obedient message will be increasingly challenged.” said ING.
At 07.25 GMT, the dollar was up 0.1% against a basket of currencies at 92,201, moving away from the recent three-week lows.
The 10-year US Treasury yield stood at 1.6979% for the third consecutive day of earnings, but still well below the level of 1.77760% reached on March 30, which was the highest in a year.
“There is widespread expectation that inflation will rise in the coming months, but there is also a consensus for the most part that this will be a transitory phenomenon,” Deutsche Bank strategist Jim Reid wrote in a note.
Overnight data showed that China’s exports increased in March, with imports growing to a four-year high, indicating an improvement in global demand.
Asian stock markets were largely positive after the data, but the momentum did not serve to support foreign exchange markets. When traded in early London, China’s offshore yuan fell 0.1% against the dollar, changing hands to 6.5523.
The euro fell 0.1% to $ 1.1895.
The Australian dollar, which is considered a liquid substitute for risk appetite, fell 0.2% against the US dollar (0.7609).
On Monday, Australia abandoned the goal of vaccinating almost its entire population by the end of 2021.
The New Zealand dollar also fell, falling 0.1%. The Reserve Bank of New Zealand is due to meet on Wednesday and is expected to keep rates constant.
The British pound rose 0.1% against the dollar to $ 1.3763. The UK economy grew in February as companies prepared to lift the third coronavirus blockade, gross domestic product data showed.
Elsewhere, Bitcoin rose 1.6% to $ 60,807.77, ahead of Coinbase Global Inc., the largest cryptocurrency exchange in the United States, which was listed on the Nasdaq on Wednesday.
Report by Elizabeth Howcroft, edited by Larry King