* Greenback set for 0.5% drop this week after hitting
1-month low
* Benchmark yield fell most in 5 months despite strong U.S.
data
* Federal Reserve officials continue to bang
lower-for-longer drum
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Kevin Buckland
TOKYO, April 16 (Reuters) - The dollar headed for its worst
back-to-back weekly drop this year amid an extended retreat in
Treasury yields as investors increasingly bought into the
Federal Reserve's insistence of keeping an accommodative policy
stance for a while longer.
The benchmark 10-year Treasury yield US10YT=RR dipped to a
one-month low of 1.528% overnight, moving further away from over
a one-year of 1.776% reached at the end of last month, even in
the face of Thursday's stronger-than-expected retail sales and
employment data. San Francisco Fed President Mary Daly said on the same day
that the U.S. economy is still far from making "substantial
progress" toward the central bank's goals of 2% inflation and
full employment, the bar the Fed has set for beginning to
consider reducing its support for the economy. That echoed Fed Chair Jerome Powell's comments in several
speeches over the past week that policymakers will look through
near-term rises in prices amid ongoing slack in the labour
market.
The dollar index =USD , which tracks the greenback against
six major peers, dipped to an almost-one-month low of 91.487
overnight before recovering somewhat to 91.752 in the Asian
session.
It's set for a 0.5% decline for the week, extending the 0.9%
slide from the previous week.
The gauge, also known as the DXY, surged with Treasury
yields to an almost-five-month high at 93.439 on the final day
of March, on bets that massive fiscal spending coupled with
continued monetary easing will spur faster U.S. economic growth
and higher inflation, particularly compared to places like
Europe.
But bond and foreign-exchange markets now seem willing to
give the Fed the benefit of the doubt that inflation pressure
will be transitory and monetary stimulus will remain in place
for years to come.
The dollar is "still struggling to find its feet in April,
even though the U.S. macro outperformance narrative could not be
more propitious," Westpac strategists wrote in a research note.
"The DXY is trading like its topping out now, sooner than
(we) expected," and a break below 91.3 would confirm the
downtrend, they said.
Retail sales increased 9.8% last month, beating economists'
expectations for a 5.9% rise, while first-time claims for
unemployment benefits tumbled last week to the lowest level in
more than a year, separate reports showed Thursday. The dollar traded at 108.825 yen JPY=EBS , heading for a
0.8% loss for the week, following a 0.9% decline the previous
week.
The euro EUR=EBS changed hands at $1.19585, set for a 0.5%
weekly advance, adding to the previous period's 1.3% surge.
Some analysts also pointed to Wall Street's strong gains,
with the S&P 500 and Dow both posting record highs, as weighing
on the traditionally safe-haven dollar amid increased risk
appetite.
"Lower U.S. bond yields and positive risk sentiment have
once again been a cocktail fuelling a softer USD," Ray Attrill,
the head of foreign-exchange strategy at National Australia
Bank, said in a note to clients.
The rally in equities has "driven a wedge between the strong
data and the USD," he said.
Highly anticipated economic data from China on Friday
ultimately had little effect on currencies, even as the world's
second largest economy posted record 18.3% growth in the first
quarter year-on-year. The Chinese yuan slipped 0.1% to 6.5326 per dollar in the
offshore market. CNH=EBS
In cryptocurrencies, Bitcoin BTC=BTSP stood around
$62,850, near the record high of $64,895 reached on Wednesday,
when cryptocurrency platform Coinbase COIN.O made its debut in
Nasdaq in a direct listing. Currency bid prices at 401 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1957 $1.1966 -0.07% -2.13% +1.1975 +1.1951
Dollar/Yen JPY=D3 108.8200 108.7050 +0.17% +5.42% +108.9270 +108.6900
Euro/Yen EURJPY= 130.13 130.15 -0.02% +2.53% +130.2300 +129.9800
Dollar/Swiss CHF=EBS 0.9226 0.9221 +0.10% +4.32% +0.9235 +0.9220
Sterling/Dollar GBP=D3 1.3757 1.3781 -0.16% +0.71% +1.3785 +1.3754
Dollar/Canadian CAD=D3 1.2543 1.2548 -0.04% -1.50% +1.2558 +1.2536
Aussie/Dollar AUD=D3 0.7731 0.7748 -0.21% +0.51% +0.7754 +0.7724
NZ NZD=D3 0.7159 0.7171 -0.13% -0.26% +0.7177 +0.7151
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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