US Dollar to Decline For Second Consecutive Week as Inflation Concerns Ease
The US dollar looks all set to end yet another week in the red and post the worst back-to-back weekly decline on account of a weakness in US Treasury yields over the past few sessions. At the time of writing, the US dollar index DXY is trading around 91.59.
During the previous session, the benchmark 10-year US Treasury yields sank to the lowest levels seen in one month, falling from a 14-month high hit about a fortnight ago. Even a strong retail sales report and a decline in weekly jobless claims failed to make an impression and drive some strength in the greenback.
The US dollar faced additional downward pressure over comments by San Francisco Fed President Mary Daly who remarked that the US economy has a long way to go to reach the central bank’s goals for inflation and complete employment. These comments once again reminded markets of the Fed’s plans to stay dovish for an extended period of time despite recent strong economic data releases.
So far this week, the reserve currency has lost around 0.6% of its value against its major peers, after weakening by 0.9% over the past week. During March, both the dollar and Treasury yields had risen over concerns of inflation heating up as the US economy posts a rapid recovery. However, Fed officials have played down the possibility of a spike in inflation, stating that an increase in prices could be temporary and need not require any intervention, easing market concerns and driving a downtrend in the currency.
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