FOREX-Dollar at three-week low on tamped down fears over inflation

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

By Hideyuki Sano
TOKYO, April 14 (Reuters) - The dollar stood near three-week
lows against the euro and the yen on Wednesday, after a
larger-than-expected uptick in a U.S. consumer price gauge did
not spark wider fears about accelerating inflation and the
Federal Reserve's tapering.
The dollar traded at 109.03 yen JPY= , near its lowest
since late March, while the euro popped up to $1.1948 EUR= ,
hitting its highest level since late March, as it extended a
rally from a five-month low of $1.1704 set on March 31.
While the dollar was stuck near its familiar ranges against
most other currencies, the dollar's index against a basket of
six major units hit a three-week low of 91.791 and last stood at
91.831 =USD .
The greenback's fall came as the U.S. consumer price index
jumped 0.6% in March versus the previous month, the largest gain
since August 2012, and rose 2.6% from a year earlier, both 0.1
percentage point above market expectations.
The core CPI, which excludes volatile foods and energy, was
also a tad stronger than expected, with a year-on-year increase
of 1.6%. "Inflation has been expected to accelerate in the April-June
quarter. Although the latest reading was a bit stronger than
expected, it wasn't out of the blue," said Masafumi Yamamoto,
chief currency strategist at Mizuho Securities.
Speculation that firmer inflation could propel the Federal
Reserve to reduce its quantitative easing and low interest rates
earlier than it has pledged has been a major driver of the
dollar's rally in the first quarter.
The dollar lost steam however as U.S. bond yields dipped on
Tuesday, thus reducing the currency's yield attraction, as solid
demand for a 30-year bond auction trumped any worries about
inflation. US/
The U.S. central bank has said it will look through
temporary increases in inflation, and analysts expect it will
allow inflation to run hotter than previously expected before
raising rates.
Philadelphia Fed Bank President Patrick Harker said on
Tuesday it is unlikely that inflation will run out of control
this year. Still many investors are wary of risk of further
acceleration in the U.S. economy as vaccination rollouts have
moved fast, allowing economic activities to restart.
"Eventually there will be another large scale fiscal
stimulus, which should support the dollar," Mizuho's Yamamoto
also added.
Elsewhere, the Singapore dollar rose 0.2% to S$1.3386 per
U.S. dollar SGD= after the Monetary Authority of Singapore
(MAS) left its exchange-rate policy settings unchanged.
The Russian rouble RUBUTSTN=MCX gained about 2% overnight
after U.S. President Joe Biden called on Russian President
Vladimir Putin to reduce tensions between Russia and Ukraine.
Biden phoned Putin to propose they meet in a third country,
in a sign of concern about tensions spinning out of control in
the Ukraine crisis.
In crypto, bitcoin traded at $63,287 BTC=BTSP after
hitting a record high of $63,769, ahead of the listing of shares
in cryptocurrency platform Coinbase on Nasdaq. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
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(Editing by Jacqueline Wong)