Forex – Dollar Rides Steeper Yield Curve as 10Y Jumps Above 2.9%

© Reuters. – The dollar remained close to highs against a basket of major currencies as surging bond yields offset earlier weakness in the greenback.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.25% to 89.57, after hitting a session high of 89.63.

The U.S. Department of Labor reported Thursday that fell by 1,000 to a seasonally adjusted 232,000 for the week ended April 13, missing economists’ forecast for a drop to 230,000.

The Philadelphia Fed said Thursday its rose to a reading of 23.2, a three-month high, from 20.8 in April.

The higher Philly Fed reading pointed to signs of a continued rise in input costs, stoking investor expectations for a faster pace of inflation, underpinning a move higher in bond yields – a dollar positive. The rose above a key 2.9% level as the bond-yield curve continued to steepen.

Investors’ outlook on inflation was also bolstered by the Federal Reserve’s Beige Book report released Wednesday, suggesting that consumer inflation could be set on a path higher as rising input costs were expected to be passed onto consumers.

fell 0.06% to $1.4194, rising from a session low of $1.4162, as the pair shrugged off weaker than expected

lost 0.23% to $1.2344, while rose 0.05% to Y107.28 as the latter pair continued to add to gains despite lingering yen demand amid uncertainty over Prime Minister Shinzo Abe’s future.

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