The US Dollar Index remained close to a 3½ month peak with higher yields on US Treasury instruments prompting investors to unwind some short positions in the Dollar even as the Euro was pressured by the European Central Bank’s dovish tone. The Index hit a peak of 91.639 DXY after 10-year treasuries hit the milestone 3% mark; analysts attribute that to concerns over the increasing US debt and inflation worries. They point out that the Dollar’s recent strength has been underpinned by the investors unwinding of currencies with large net long positions; those currencies have seen the largest declines. Euro speculation and unwinding of those net long positions resulted in the common currency falling to a level not seen since mid-January.
As reported at 10:22 am (JST) in Tokyo, the EUR/USD was trading at $1.2105, up 0.01%; the pair has ranged from a session trough of $1.21014 to a peak of $1.21095. The GBP/USD was trading at $1.3916, up 0.02%, just off the peak of $1.3920.
Japanese Data Misses Mark
In Tokyo, the Statistics Bureau reported that core CPI unexpectedly fell to 0.06% in April, below analysts’ predictions of 0.08%, essentially flat. Retail trade was also lower than expected for March, hitting 1.0% on a year-over-year basis. Industrial production was unexpectedly upbeat in March, hitting 1.2%, above the 0.5% forecasted by economists. The USD/JPY is trading at 109.312 Yen, up 0.01%; the pair’s session trough was 109.235 Yen.