Daily Morning Report 15.05.2018

The U.S. dollar edged higher on Today, pulling away from more than one-week lows as indications that global trade tensions are easing helped push U.S. Treasury yields back above the key 3% level.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, edged up 0.04% to 92.60 by 06:58 GMT, moving away from Monday’s lows of 92.11, which was the weakest since May 2.

The dollar found support as the yield on 10-year U.S. Treasury notes ticked up to 3.025%, the highest level in three weeks. A rise above the high of 3.035% reached on April 25 would take it to its highest since early 2014.

U.S. bond yields were boosted by signs of easing trade tensions between the U.S. and China after U.S. President Donald Trump pledged to help Chinese technology company.

Last month, the Trump administration barred U.S. companies from selling to ZTE, effectively crippling the company.

A rally in the dollar, which hit four-and-a-half month highs against a currency basket last week, lost momentum after tame U.S. inflation data tempered expectations for a faster pace of rate hikes by the Federal Reserve this year.

The Fed raised rates in March and projected two more rate hikes this year, although many investors had seen three hikes as possible.

Investors were looking ahead to data on U.S. retail sales later in the day for signs of strength in the economy.

The dollar was higher against the yen, with USDJPY up 0.22% at 109.89.

The euro was almost unchanged, with EURUSD at 1.1930, holing below Monday’s highs of 1.1995, which was the most since May 3.

The euro touched the day’s highs on Monday after European Central Bank policymaker Francois Villeroy de Galhau said that the bank could give fresh guidance on the timing of a first-rate hike as the end of its monetary stimulus program nears.

The pound was steady, with GBPUSD last at 1.3552 ahead of the latest UK jobs report later in the day.

Elsewhere, the Australian dollar was lower, with AUDUSD sliding 0.11% to 0.7519, while the New Zealand dollar was little changed, with NZDUSD last at 0.6915.

The Aussie and the kiwi had a muted reaction to a batch of Chinese economic data pointing to further slowing in economic momentum.