FOREX-Commodity currencies hold advantage as dollar waits for inflation and Fed

Published 11/05/2021, 01:31
Updated 11/05/2021, 01:36
© Reuters.
USD/MXN
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* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
* Commodity price gains lift exporters' currencies
* Dollar bides time before U.S. CPI and Fed speakers
* Sterling continues stellar run as coronavirus risks fade

By Stanley White
TOKYO, May 11 (Reuters) - The dollar nursed losses against
the currencies of major commodity exporters which enjoyed
support from expectations for further gains in the price of oil,
copper, steel, and other metals.
Traders are keenly awaiting the release of U.S. consumer
price data on Wednesday to measure whether inflationary pressure
is building, which could push Treasury yields higher and slow
the dollar's fall, some traders say.
Treasuries and the dollar have swung back and forth as
investors adjust their expectations for when the U.S. Federal
Reserve will start tapering bond purchases and raising interest
rates as the U.S. economy gains momentum.
A host of Fed speakers this week are likely to leave
investors with plenty to consider as they try to forecast how
policymakers will react to receding risks posed by the
coronavirus in some major economies.
"Right now the easiest reflation trade is to watch commodity
prices and buy commodity currencies," said Yukio Ishizuki,
foreign exchange strategist at Daiwa Securities.
"The markets have doubts about the Fed's benign view of
inflation, but uncertainty about policy keeps some currency
pairs in a tight range."
Against the Canadian dollar CAD=D3 , the U.S. dollar traded
at C$1.2097, close to its weakest in more than three years.
The Australian dollar AUD=D3 edged up to $0.7836, near an
11-week high. Across the Tasman Sea, the New Zealand dollar
NZD=D3 was quoted at $0.7267, which is near its strongest
level since late February.
The greenback was also near a two-week low against the
Mexican peso MXN= .
Many investors expect commodities demand to surge as
coronavirus vaccinations allow more countries to resume normal
economic activity.
In addition, supply constraints for some commodities suggest
that prices could remain elevated for an extended period, which
has made some commodity currencies the best performers against
the dollar so far this year.
Investors are also focused on how the U.S. labour market
will affect inflation in the world's largest economy, but a
disappointing nonfarm payrolls report last week has left the
dollar mixed against other currencies.
The British pound GBP=D3 bought $1.4130, close to its
strongest since Feb. 25 as investors cheered Britain's progress
in reopening its economy.
The euro EUR=D3 edged up to $1.2137.
Against the yen JPY=D3 , the dollar was flat at 108.87.
In the cryptocurrency market, ether ETH=BTSP was quoted at
$3,906, down slightly from a record high of $4,200. Bigger rival
bitcoin BTC=BTSP fell slightly to $55,578.

========================================================
Currency bid prices at 0006 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2137 $1.2128 +0.07% -0.67% +1.2143 +1.2127
Dollar/Yen JPY=EBS 108.8700 108.8400 +0.00% +5.37% +108.8800 +108.8100
Euro/Yen S>
Dollar/Swiss CHF=EBS 0.9009 0.9012 -0.06% +1.80% +0.9011 +0.9006
Sterling/Dollar GBP=D3 1.4130 1.4117 +0.10% +3.43% +1.4132 +1.4115
Dollar/Canadian CAD=D3 1.2097 1.2103 -0.04% -4.99% +1.2104 +1.2091
Aussie/Dollar AUD=D3 0.7836 0.7830 +0.08% +1.87% +0.7842 +0.7830
NZ NZD=D3 0.7267 0.7262 +0.08% +1.20% +0.7272 +0.7261
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX

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World FX rates https://tmsnrt.rs/2RBWI5E
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