* 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
By Stanley White
TOKYO, March 11 (Reuters) - The dollar nursed losses against
most currencies on Thursday after benign data on U.S. consumer
price data 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 on Thursday where policymakers are expected to
send a message that they will prevent bond yields from rising
further and harming the bloc's economic outlook. Sentiment for the dollar remains fairly positive 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 further declines in the dollar are
likely temporary.
"The reflation trade looks set to continue," said Junichi
Ishikawa, senior foreign exchange strategist at IG Securities.
"The dollar is the dominant theme in the currency market,
and this is just a temporary pause in its uptrend."
Against the euro EUR=D3 , the dollar was quoted at $1.1928,
nursing a 0.2% loss from the previous session.
The British pound GBP=D3 bought $1.3933 after rising 0.3%
on Wednesday.
The dollar traded at 108.37 yen JPY=D3 , extending a
pullback from a nine-month high reached on Tuesday.
Against the safe-harbour Swiss franc CHF=D3 , the dollar
bought 0.9297.
U.S. core consumer prices rose 1.3% year-on-year in
February, a slight slowdown from a 1.4% annual increase in the
previous month, data showed on Wednesday. The dollar and U.S. Treasury yields have been rising
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.
Traders are also closely watching an auction of 30-year
Treasuries later on Thursday, which will be an important test of
demand for new debt.
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.
If future auctions also draw reasonably strong demand this
would be another positive factor for the dollar, according to IG
Securities' Ishikawa.
The dollar index =USD against a basket of six major
currencies was little changed at 91.771.
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, which is another reason for traders to remain cautious
before the ECB's meeting. Elsewhere, the Australian AUD=D3 and New Zealand dollars
NZD=D3 steadied against the greenback, but sentiment for the
antipodean currencies remains strong due rising commodity prices
and expectations for an acceleration in global trade.
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Currency bid prices at 0014 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1928 $1.1929 -0.01% -2.37% +1.1930 +1.1924
Dollar/Yen JPY=D3 108.3700 108.5400 -0.16% +4.91% +108.4600 +108.3600
Euro/Yen EURJPY= 129.26 129.28 -0.02% +1.84% +129.3700 +129.2500
Dollar/Swiss CHF=EBS 0.9297 0.9299 -0.01% +5.10% +0.9299 +0.9298
Sterling/Dollar GBP=D3 1.3933 1.3935 -0.01% +1.99% +1.3935 +1.3929
Dollar/Canadian CAD=D3 1.2612 1.2620 -0.04% -0.93% +1.2621 +1.2615
Aussie/Dollar AUD=D3 0.7740 0.7737 +0.05% +0.63% +0.7741 +0.7730
NZ NZD=D3 0.7198 0.7195 +0.03% +0.22% +0.7198 +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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