Title: Dollar Edges Higher as Yields Rise; Euro Receives Macron Boost

Apr 11, 2022 02:56AM ET

By: AnalysisWatch

The U.S. dollar edged higher in early European trading on Monday, supported by continued strength in U.S. bond yields, while the euro was helped by incumbent Emmanuel Macron's lead after the first round of the French presidential election.

At 2:55 AM ET, the U.S. dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 99.987, showing continued strength after gaining about 1% last week.

The dollar benefited from the aggressive stance of the U.S. Federal Reserve, which raised interest rates by 25 basis points at its March meeting and will likely continue to do so later this year.

The USD/JPY rose 0.8% to 125.36, with the yen suffering from the fact that the Bank of Japan is keeping its yields near zero, in direct contrast to the Fed's stance.

On the other hand, EUR/USD rose to 1.0880, receiving support from the results of the first round of the French presidential election, in which incumbent Emmanuel Macron received the most votes.

The more hawkish members of the group have urged the central bank to immediately scale back its accommodative policy, but while the central bank may provide more details on scaling back asset purchases, it is unlikely to give explicit hints of increases.

GBP/USD fell 0.3% to 1.2993 after the UK economy's growth slowed more than expected in February, with GDP rising 0.1% after 0.8% growth in January.

As iron ore prices fell, AUD/USD fell 0.4% to 0.7429, a three-week low, while USD/CNY rose 0.1% to 6.3727 after China's producer price index rose 8.3% y/y, with the world's second-largest economy struggling to cope with inflationary pressures stemming from Russia's incursion into Ukraine and the recent COVID-19 outbreak.