The dollar slides as the European market reopens

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LONDON, April 11 (Reuters) – The dollar gave up yesterday’s advances against the euro and the pound but held on to some gains against the yen on Tuesday as traders’ attention turned to US inflation data due Wednesday for signs of US rate proximity. to culminate.

The euro rose 0.4% to $1.0903 and the pound rose 0.5% to $1.2439 as most European markets recovered from the Easter long weekend.

Both currencies during the pause had slipped from their early April highs after the resilient US labor market released on Friday bolstered the case for a Federal Reserve rate hike next month, and also eased fears of a more marked slowdown in the US economy.

“The Fed’s early May meeting is starting to loom and data on how to get there is front and center,” said Jane Foley, head of FX strategy at Rabobank.

She said the euro’s ability to rise above $1.09 would depend on forthcoming data and what it means for US interest rates.

“Banking revenues will also be important, they often don’t directly reach the foreign exchange markets, but they could be given by the recent jitters,” Foley added.

Tuesday’s movements were also affected by the reopening of European markets after the break, said Simon Harvey, head of FX analysis at Monex Europe, given limited liquidity on Friday and Monday with most European markets closed.

He said currency-swapping algorithms based on the difference between European and US rates could have sold euros for dollars when US Treasury yields rose after jobs data as European bond markets were closed.

European bond yields rose sharply on Tuesday after the break.

“There’s just this catch-up effect,” Harvey said.

The dollar also slipped against the Japanese yen, falling 0.4% to 133.09, after surging 1.1% on Monday, helped by new Bank of Japan Governor Kazuo Ueda, who promised to s stick to super-easy stimulus settings when he takes office on Monday.

Traders now see about a two-thirds chance that the Fed will hike rates another quarter point on May 3, according to the CME’s Fedwatch tool.

The dollar also weakened elsewhere, falling 0.58% against the Swiss franc to 0.9042, and also weakened against the Australian dollar, with the Aussie up 0.42% to $0.667, helped by a thaw in trade tensions with China, as the pair agreed to end a dispute over Australian barley.

Bitcoin hit a new 10-month high at $30,438 on Tuesday before fetching $30,140 for the final time after breaking free from recent ranges on Monday.

The digital token was stuck between around $26,500 and $29,400 for the previous three weeks.

Reporting by Alun John in London and Kevin Buckland in Tokyo; Editing by Christina Fincher

Our standards: The Thomson Reuters Trust Principles.

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