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Dollar Retreats From High as U.S. Bond Yields Ease

2018-5-18 11:08:09Trading Strategies
 Dollar Retreats From High as U.S. Bond Yields Ease

The dollar traded roughly flat against its rivals but remained close to five-month highs following a wave of data that helped reassure investors the U.S. economy remains on solid footing.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.05% to 93.31.

The U.S. Department of Labor reported Thursday that initial jobless claims rose by 10,000 to a seasonally adjusted 222,000 for the week ended May 12. That missed economist forecast but analysts said initial jobless claims remained at historically low levels, which would continue to keep the unemployment rate trending lower.

The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 34.4 in May, from 23.2 the previous month.

The prices paid component of the Philly Fed data ticked lower but the prices received component rose to a fresh cycle high, suggesting that the pass-through of higher prices to consumers was starting to take shape, leading to a potential rise in inflation, RBC said.

Rising bond yields also supported the dollar as the 10-year yield rose to a session high of 3.122% before retreating.

EUR/USD fell 0.01% to $1.1807 as traders continued to digests reports suggesting Italy's anti-establishment Five-Star Movement and anti-immigrant League may ask the European Central Bank to forgive $294.18 billion of debt.

GBP/USD rose 0.23% to $1.3518 after UK Prime Minister Theresa May dismissed a report the UK may remain in the EU’s customs union after Brexit.

USD/JPY rose 0.24% Y110.66, while USD/CAD fell 0.03% to C$1.2797.