The dollar maintained its outperformance against global currencies on Thursday as traders remained cautious ahead of US inflation data.
The US Dollar Index (.DXY), which tracks the greenback's performance against a basket of global currencies, was up 0.14% at 105.64 as the Federal Reserve looked to keep interest rates higher for longer. This led to a rise in US Treasury yields, which supported the dollar.
The yield on the 10-year US Treasury note rose 0.69% to 4.51%.
The USD/JPY pair traded at 155.74, up 0.16%. At the same time, fears of further intervention from the Bank of Japan are limiting the pair's growth.
Despite the Japanese authorities' increased attention to the currency's volatility, the Japanese yen continues to fall. Finance Minister Shunich Suzuki reiterated that the authorities are ready to respond to excessive currency volatility, while Bank of Japan Governor Kazuo Ueda emphasized that the central bank will assess the impact of yen movements on inflation to inform policy decisions.
The yen remains under pressure as the interest rate differential between the Fed and the Bank of Japan remains wide.
Traders are now looking ahead to next week's release of the US Producer Price Index (PPI) and Consumer Price Index (CPI) for April. Markets will be looking for signs that inflation has resumed its downward trend toward the Fed's 2% target rate, Reuters informs.
The EUR/USD was down 0.07% at 1.0737. Recent comments from European Central Bank (ECB) officials have increased the likelihood that the ECB will begin its easing program in June, leading to speculation of three rate cuts before the end of 2024.
The GBP/USD fell 0.17% to 1.2476 ahead of the Bank of England's monetary policy decision.
Markets expect the Bank of England to keep interest rates on hold as deflationary pressures continue in the UK.
AUD/USD and NZD/USD fell 0.11% to 0.6571 and 0.5997, respectively.
See also: IC Markets secures non-dealing online forex broker license in Kenya