The dollar has overcame losses against currencies on Thursday after soft data on U.S. consumer price data.
U.S. core consumer prices had risen 1.3% year-on-year in February, a slight slowdown from a 1.4% annual increase in the previous month as per data showed on Wednesday. The dollar and U.S. Treasury yields have rose steadily due to expectations that the Federal Reserve’s loose monetary policy and fiscal stimulus will stoke inflation, but the subdued price data took some momentum away from the greenback.
Sentiment for the dollar is on the positive node as the U.S. economy is recovering from the coronavirus pandemic and President Joe Biden’s $1.9 trillion stimulus bill has won final approval in Congress, so any other further downtrend in the dollar is not about to take place.
Today the House Democrats passed their relief bill of $1.9 trillion, encompassing every person and industry vastly affected by the Covid-19 pandemic. A few key things that will be included are a $1,400 check to all Americans making less than $80,000 a year and extending the jobless claims benefits to more people until September 6th.
An auction of 30- year Treasuries is much awaited. An auction of 10-year Treasuries on Wednesday was met with sufficient demand, easing concerns about investors’ ability to absorb an increase in debt needed to finance the response to the coronavirus.
On the contrary, US Secretary of State Antony Blinken’s tough stand versus China and Iran seems to test the risks ahead of his first official trip that will begin on March 18. These plays helped US equities but futures await more clues to extend the latest optimism. As a result, today’s ECB and weekly US Jobless Claims should be watched closely ahead of US President Biden’s speech that could please the risk-takers and favor US dollar bears.
USD/JPY 4 Hour Chart:
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