FOREX-Dollar near 2-1/2-month lows as commodity gains stoke inflation worries

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

By Saikat Chatterjee
LONDON, May 11 (Reuters) - Resource-oriented currencies
including the Canadian dollar and the Aussie consolidated gains
on Tuesday, as a rally in commodity prices boosted their appeal,
while the greenback held near multi-month lows on growing
concerns about price pressures.
Soaring commodity prices have sent the cost of raw materials
from copper to iron ore and lumber to record highs, raising
concerns that inflation may not be as transitory as some believe
with U.S. breakeven rates scaling multi-year peaks. MKTS/GLOB
The Australian dollar AUD=D3 steadied at $0.7827, hovering
just below a two-month high hit on Monday. The Canadian currency
CAD=D3 stabilised near a near four-year high, while the New
Zealand dollar NZD=D3 perched comfortably at February highs.
But markets were broadly trading in narrow ranges by looming
U.S. consumer price figures due on Wednesday, as traders worried
that a big number might prompt the Fed to wind back monetary
policy support sooner than expected.
"The dollar might find some short-term support tomorrow, if
the consumer prices surprise notably on the upside," Commerzbank
strategists said in a daily note.
Appearances later on Tuesday from U.S. Federal Reserve
members John Williams, at 1430 GMT, and Lael Brainard, at 1600
GMT, will be parsed for clues as to central bank thinking.
Against a basket of its major rivals =USD , the dollar
steadied at 90.283, just above a Feb. 25 low of 90.03 hit in the
previous session.
"The big question is whether the Fed can be comfortable
staying dovish," said Bank of Singapore currency analyst Moh
Siong Sim. "If inflation rises more than the Fed expects... what
happens to the Fed then?"
Markets expect U.S. year-on-year inflation to hit 3.6% in
April, juiced by the base effect of a pandemic year contraction.
Investors seem increasingly at odds with policymakers over
whether that sort of price growth will persist, and drove up
U.S. five-year breakevens - a measure of inflation expectations
- to a decade-high 2.717% on Monday. US/

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