• The dollar fell across the board on Thursday, hitting a fresh 15-month low against the yen late in the session, as negative sentiment about the U.S. currency outweighed a rise in 10-year Treasury yields to their highest levels in four years.
The dollar had briefly jumped on Wednesday after data showed U.S. inflation was stronger than expected in January, bolstering expectations that the Federal Reserve could increase interest rates as many as four times this year.
But it quickly turned lower, eventually posting its worst daily performance in three weeks against a basket of major rivals. It added to those losses on Thursday, with the dollar index hitting a three-week low of 88.546.
• Further evidence of rising inflation came in a report on Thursday, which showed U.S. producer prices accelerated in January, boosted by strong gains in the cost of gasoline and healthcare. There was no significant move in the dollar on the news.
• Some analysts suggested mounting worries over the deficit in the United States - which is projected to balloon to near $1 trillion in 2019 amid a government spending splurge and large corporate tax cuts - as a reason for dollar weakness.
• Against the yen, the dollar skidded as much as 0.9 percent from Wednesday’s close to 106.03 yen, its lowest since November 2016.
• The euro climbed back above $1.251 for the first time in two weeks, trading up almost half a percent from its last close. It was last at $1.250.
• The benchmark 10-year U.S. Treasury note US10YT=RR rose 1/32 in price to push yields down to 2.9077 percent. Earlier in the session yields had shot up to 2.944 percent.
• Bitcoin rose above $10,000 on Thursday for the first time in more than two weeks, as investors bought back the digital currency after having fallen 70 percent from its all-time peak hit in mid-December.
• U.S. President Donald Trump’s tax reform will help boost U.S. growth in the short term but may have negative consequences such as on the deficit and debt in the medium term, International Monetary Fund chief Christine Lagarde said.
• The Labor Department said its producer price index for final demand rose 0.4 percent last month after being unchanged in December. That lifted the year-on-year increase in the PPI to 2.7 percent from 2.6 percent in December.
A key gauge of underlying producer price pressures that excludes food, energy and trade services jumped 0.4 percent last month. The so-called core PPI edged up 0.1 percent in December.
Core PPI rose 2.5 percent in the 12 months through January, the largest increase since August 2014. That followed a 2.3 percent gain in December.
• The Fed has a 2 percent inflation target. Following the CPI and PPI reports, Morgan Stanley is forecasting the core PCE price index rising 0.31 percent in January after increasing 0.2 percent in December.
That would raise the year-on-year increase in the core PCE price index to 1.6 percent from 1.5 percent in December. The data is scheduled for release on March 1.
• The U.S. Senate rejected a series of bills to protect “Dreamer” immigrants on Thursday, leaving in limbo the future of 1.8 million young adults brought to the United States illegally as children.
• Oil markets were mixed on Thursday with Brent flat even though the dollar slid, while U.S. crude rose as investors covered short positions. Global benchmark Brent LCOc1 slipped 3 cents to settle at $64.33 a barrel. U.S. West Texas Intermediate crude CLc1 gained 74 cents, or 1.2 percent, to settle at $61.34.
Reference: Reuters
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