Commodity currencies hold advantage as dollar waits for inflation and Fed

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The dollar nursed losses against the currencies of major commodity exporters which enjoyed support from expectations for further gains in the ...

The dollar nursed losses against the currencies of major commodity exporters which enjoyed support from expectations for further gains in the price of oil, copper, steel, and other metals.

Traders are keenly awaiting the release of U.S. consumer price data on Wednesday to measure whether inflationary pressure is building, which could push Treasury yields higher and slow the dollar's fall, some traders say.Treasuries and the dollar have swung back and forth as investors adjust their expectations for when the U.S. Federal Reserve will start tapering bond purchases and raising interest rates as the U.S. economy gains momentum.

"Right now the easiest reflation trade is to watch commodity prices and buy commodity currencies," said Yukio Ishizuki, foreign exchange strategist at Daiwa Securities. The Australian dollar edged up to US$0.7836, near an 11-week high. Across the Tasman Sea, the New Zealand dollar was quoted at US$0.7267, which is near its strongest level since late February.Many investors expect commodities demand to surge as coronavirus vaccinations allow more countries to resume normal economic activity.

 

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