May 28 (Reuters) – The dollar gained on Tuesday, giving back earlier losses, as benchmark U.S. Treasury yields hit a four-week high following some weak auctions.
“The bond market has turned around today and the dollar with it,” said Adam Button, chief currency analyst at ForexLive in Toronto, citing the weak auctions and noting that the improving consumer confidence report reflects “stronger growth.”
U.S. economic data was better than expected in the first quarter and so far there are no major signs of deterioration in areas such as the labor market, which some traders are waiting on before taking a more bearish view on the greenback.
Concerns that inflation will remain stubbornly above the Fed’s target for longer are also providing some support for the U.S. currency. Tuesday’s data showed that worries about inflation persisted and many households expected higher interest rates over the next year.
“The Fed is in no rush to cut rates,” said Button. He added, “the American economy is uniquely strong. It’s tough to bet against the U.S. dollar until the weakness is confirmed.”
This week’s main U.S. economic focus will be personal consumption expenditures due on Friday, which is the Fed’s preferred inflation measure.
The dollar index was last up 0.03% at 104.59, after earlier dropping to 104.33. The euro gained 0.01% to $1.0859. Sterling weakened 0.05% to $1.276.
German inflation data due on Wednesday and the wider euro zone’s reading on Friday will be watched for clues on how soon easing from the central bank could come.
The greenback gained 0.18% against the Japanese yen to 157.15 yen.
In cryptocurrencies, bitcoin fell 2.48% to $67,860.42.
Sign up here.
Reporting by Karen Brettell
Additional reporting by Stefano Rebaudo and Alden Bentley;
Editing by Ana Nicoladi da Costa and Matthew Lewis
Our Standards: The Thomson Reuters Trust Principles.
