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Forex Today: Dollar edges higher on rising yields ahead of EU sentiment, US inflation

Here is what you need to know on Tuesday, April 12:

In the absence of high-tier macroeconomic data releases on Monday, the dollar capitalized on safe-haven flows and continued to gather strength against its rivals. Ahead of the ZEW sentiment survey results for the euro area and Germany, markets remain risk-averse early Tuesday. Later in the day, the Consumer Price Index (CPI) data will be featured in the US economic docket. Meanwhile, the 10-year US Treasury bond yield is sitting at its highest level since December 2018 above 2.8%. A 10-year US Treasury note auction will be held at around 1700 GMT. 

US Consumer Price Index March Preview: Federal Reserve policy affirmed.

The UK's Ministry of Defence said on Tuesday that they were expecting fighting in eastern Ukraine to intensify over the next two or three weeks. Earlier in the day, Ukrainian President Volodymyr Zelenskyy noted that they take the threat of Russia using chemical weapons seriously. Additionally, Germany's foreign minister announced on Monday that EU foreign ministers had agreed to ramp up weapon deliveries to Ukraine. Reflecting the sour market mood, US stock index futures are down between 0.3% and 0.5% in the European morning. 

EUR/USD recovered to 1.0950 on Monday but turned south in the second half of the day to close below 1.0900. The pair stays under modest bearish pressure early Tuesday. The ZEW survey is expected to unveil a deterioration in Economic Sentiment in the eurozone and Germany in April. Germany's Destatis announced earlier in the day that the annual HICP inflation climbed to 7.6% in March, matching the flash estimate and the market expectation.

GBP/USD stays on the back foot and edges lower toward 1.3000. The UK's ONS reported on Tuesday that the ILO Unemployment Rate declined to 3.8% in three months to February. Wage inflation, as measured by Average Earnings Including Bonus, rose to 5.4% on a yearly basis from 4.8% in January.

USD/JPY continues to push higher and trades at its strongest level since June 2015 above 125.50. The benchmark 10-year US Treasury bond yield, which gained more than 13% last week, is already up 4% this week.

Gold touched a fresh multi-week high near $1,970 on Monday on the back of safe-haven flows but retreated below $1,960. XAU/USD fluctuate in a relatively tight channel at around $1,955 in the European session.

Bitcoin fell to its lowest level in nearly a month on Monday and trades within a touching distance of $40,000 early Tuesday. Ethereum tests the $3,000 handle after losing 7% on Monday.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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