Dollar Touches One-Year High Versus Yen

The dollar climbed higher in early European forex trade on Tuesday, hitting a one-year high against the Japanese yen. U.S. Treasury yields started rising again over inflation worries. 

Most of the dollar’s higher moves on Tuesday have been against the yen. The USD/JPY pair added 0.3% at 110.15, moving above 110 for the first time since March 2020. In particular, this pair is sensitive to movements in U.S. Treasury yields.

The Dollar Index was up 0.1% at 93.052 at 2:55 AM ET (0755 GMT), which is a new 4-1/2-month high.

The benchmark 10-year Treasury yield last stood at 1.75%. It was around the 14-month high of 1.7540% reached earlier this month. The accelerating vaccinations, signs of economic recovery, and massive U.S. stimulus fueled inflation fears. 

Later this week, President Joe Biden is due to reveal a big new plan for spending on infrastructure. On top of it would be additional spending plans on childcare and healthcare. This is due to be unveiled after Easter.

The main U.S. economic release on Tuesday will be the March CB consumer confidence figure. It is expected to show an improvement as states reopen. Additionally, as the U.S. vaccination program rapidly continues.

With that, most of the focus will be on the monthly U.S. nonfarm payroll report, due on Good Friday. This is while the Federal Reserve policymakers continue to cite weakness in the labor market. That is for their continued accommodative monetary policy stance.

Currencies Movements

The GBP/USD added 0.1% at 1.3771, with sterling holding its own since many restrictions were already lifted in England. This was due to the country having a successful vaccination program. Meanwhile, the risk-sensitive AUD/USD inched up 0.2% to 0.7645.

EUR/USD shed 0.1% to 1.1749, at a 4-1/2-month low, headed to fall by around 2.5% this month. That was for the most, so far, since mid-2019, due to rising Covid-19 cases and renewed lockdowns in countries like France and Germany. 

USD/TRY advanced 0.8% to 8.2528. This came after the news that Turkish deputy central bank governor Murat Cetinkaya has been ousted from his post. This was according to a presidential decree published in the Official Gazette on Tuesday.

Earlier in the day, the NZD/USD pair added 0.20% to 0.7011 and the USD/CNY pair gained 0.05% to 6.5714. That was ahead of China’s release of its manufacturing and non-manufacturing Purchasing Managers Indexes (PMIs) on Wednesday.

President Recep Tayyip Erdogan fired hawkish former governor Naci Agbal earlier this month. The appointment of Sahap Kavcioglu is raising fears that Turkey will return to unorthodox methods to tackle high inflation.