Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Up, but Increasing Commodity Prices Limit Gains

ForexMay 11, 2021 12:03AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Gina Lee – The dollar was up on Tuesday morning in Asia, but gains were capped by expectations that already-surging commodity prices will rise further.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.06% to 90.237 by 11:53 PM ET (3:53 AM GMT).

The USD/JPY pair inched up 0.10% to 108.89. Data released earlier in the day in Japan said that March’s household spending grew at a better-than-expected 7.2% month-on-month. Spending grew 6.2% year-on-year, the biggest gain since September 2019 and the first growth in four months.

The AUD/USD pair inched up 0.03% to 0.7833 ahead of Australia’s federal budget, due to be handed down later in the day. The NZD/USD pair edged down 0.14% to 0.7264.

The USD/CNY pair inched up 0.18% to 6.4270. China’s Consumer Price Index (CPI) just missed expectations, contracting 0.3% month-on-month but grew 0.9% year-on-year. The Producer Price Index (PPI) grew a better-than-expected 6.8% year-on-year.

The GBP/USD pair inched down 0.01% to 1.4118, passing the 1.4-mark.

Investors now await inflation data from the U.S., including core CPI, that will be released on Wednesday. The data will gauge the level of inflationary pressure and could push Treasury yields up, potentially giving the greenback a boost, according to some investors.

Prices for commodities including crude oil, copper and steel are expected to rise further, increasing concerns about runaway inflation. Treasuries and the dollar have alternated between gains and losses as investor expectations on when the U.S. Federal Reserve will start moving away from its current dovish policy vacillate.

A slew of Fed officials will also speak throughout the week, including Governor Lael Brainard later in the day. Across the Atlantic, Bank of England Governor Andrew Bailey will speak on Wednesday.

"Right now, the easiest reflation trade is to watch commodity prices and buy commodity currencies... the markets have doubts about the Fed's benign view of inflation, but uncertainty about policy keeps some currency pairs in a tight range," Daiwa Securities foreign exchange strategist Yukio Ishizuki told Reuters.

Against other currencies, the dollar was trading at C$1.2097 against its Canadian counterpart, the greenback’s weakest level in more than three years. It was also near a two-week low against the Mexican peso.

Demand for commodities is expected to continue growing as COVID-19 vaccinations improve the economic outlook in more countries. Additionally, supply constraints for some commodities could mean inflated prices in the short term, giving commodity-linked currencies a further boost.

In cryptocurrencies, ether traded at $3,906, slightly down from its recent record high of $4,200. Bitcoin also fell slightly to $55,578.

Dollar Up, but Increasing Commodity Prices Limit Gains

Related Articles

Bitcoin falls 7% to $35,431.15
Bitcoin falls 7% to $35,431.15 By Reuters - Jun 18, 2021

(Reuters) - Bitcoin dropped 7% to $35,431.15 at 20:02 GMT on Friday, losing $2,666.53 from its previous close. Bitcoin, the world's biggest and best-known cryptocurrency, is down...

Fed-fueled dollar rises as bears make for exits
Fed-fueled dollar rises as bears make for exits By Reuters - Jun 18, 2021 7

By Saqib Iqbal Ahmed and Julien Ponthus NEW YORK (Reuters) - The dollar extended its advance against a basket of currencies on Friday, building on the gains logged after the U.S....

Trust Dollar Rally for Now, But Bears Will Be Back
Trust Dollar Rally for Now, But Bears Will Be Back By - Jun 18, 2021 2

By Yasin Ebrahim – The dollar's sunny days are set to continue for quite a while, but the Fed's path will eventually turn murky again to bring the bears out of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email