FOREX-Dollar at one-week lows after benign inflation data

© Reuters.

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
* Soft CPI data takes some steam out of reflation trade
* Dollar's upward trend remains intact
* ECB divided over response to rising bond yields

(Adds comments; updates prices)
By Stanley White and Sagarika Jaisinghani
TOKYO, March 11 (Reuters) - The dollar languished near
one-week lows on Thursday after benign data on U.S. consumer
prices and a decline in Treasury yields led some investors to
trim bets on a rapid acceleration in inflation.
The euro was in focus ahead of a European Central Bank
meeting later in the day where policymakers are expected to send
a message that they will prevent bond yields from rising further
and harming the bloc's economic outlook. The dollar index against six major currencies was flat at
91.79 USD= after hitting a one-week low of 91.75 earlier in
Asia as data showed U.S. core consumer price growth slowed
slightly in February. Against the euro EUR= , the dollar was quoted at $1.1932
per dollar, nursing a 0.2% loss from the previous session, while
versus the safe-harbour Swiss franc CHF= , the greenback bought
0.9299 franc.
"The CPI was a useful reminder to market participants that
U.S. inflation is still quite soft," said Joe Capurso, currency
analyst at Commonwealth Bank of Australia.
"It's going to take a lot to get it up to the Federal
Reserve's target. Mainly, financial markets got too bullish too
quickly about the Fed starting a rate hike cycle."
The dollar and U.S. Treasury yields have been rising
steadily due to expectations that the Fed's loose monetary
policy and fiscal stimulus will stoke inflation. The yield on
the benchmark 10-year Treasury US10YT=RR was at 1.528% on
Thursday after hitting a one-year high of 1.626% last week.
Focus later in the day will be on an auction of 30-year U.S.
Treasuries after an auction of 10-year notes on Wednesday drew
sufficient demand, easing concerns about investors' ability to
absorb an increase in debt needed to finance the response to the
pandemic. Overall, analysts said sentiment for the dollar remained
fairly positive as the U.S. economy recovers from the COVID-19
pandemic and as President Joe Biden's $1.9 trillion stimulus
bill won final approval in Congress. The British pound GBP=D3 bought $1.3935 after rising 0.3%
on Wednesday.
The yen was the only major currency to cede ground to the
dollar, falling about 0.2% to 108.55 yen JPY= .
Investors have been testing the ECB's resolve to rein in
rising bond yields. So far, the euro zone's central bank has
refrained from large-scale market intervention, and policymakers
are divided on whether one is warranted ahead of their meeting
on Thursday. Policymakers have also expressed concern about strength in
the euro, although a recent weakening of the currency has
lowered expectations about major policy changes.
"With euro strength no longer a pressing issue and higher
bond yields in focus instead, the ECB meeting should not be a
risk event for the euro," ING analysts said in a note.
Elsewhere, the Australian AUD=D3 and New Zealand dollars
NZD=D3 rose for the third straight session against the
greenback as sentiment toward the antipodean currencies remains
strong due rising commodity prices and expectations for an
acceleration in global trade.

========================================================
Currency bid prices at 0352 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1930 $1.1929 +0.01% -2.36% +1.1935 +1.1915
Dollar/Yen JPY=D3 108.5450 108.5400 +0.01% +5.09% +108.5800 +108.3600
Euro/Yen EURJPY= 129.50 129.28 +0.17% +2.03% +129.5400 +129.2400
Dollar/Swiss CHF=EBS 0.9299 0.9299 +0.01% +5.11% +0.9309 +0.9298
Sterling/Dollar GBP=D3 1.3932 1.3935 +0.00% +2.00% +1.3940 +1.3918
Dollar/Canadian CAD=D3 1.2608 1.2620 -0.12% -1.01% +1.2624 +1.2601
Aussie/Dollar AUD=D3 0.7744 0.7737 +0.09% +0.67% +0.7749 +0.7724
NZ NZD=D3 0.7206 0.7195 +0.17% +0.36% +0.7208 +0.7191
Dollar/Dollar

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

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