Investing.com – The dollar was up on Monday morning in Asia, holding firm after bouncing off a one-week low hit during the previous week. The greenback was supported by a rise in benchmark Treasury yields to more-than-one-year highs as inflation fears continue to persist.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.08% to 91.748 by 13:14 AM ET (5:14 AM GMT) after climbing from near a one-week low at the end of the previous week. The dollar Index contract rolled over to the Jun. 21 contract on Mar. 14.
The USD/JPY pair edged up 0.13% to 109.19.
The USD/CNY pair inched down 0.05% to 6.5048. Chinese data released earlier in the day said that industrial production grew 35.1% year-on-year in February, above the 30% growth in forecasts prepared by Investing.com and the previously recorded 7.3% growth.
The GBP/USD pair inched up 0.01% to 1.3923.
Investor worries about a faster-than-expected economic recovery leading to runaway inflation grew after a $1.9 trillion stimulus package was signed into law and the pace of COVID-19 vaccine rollouts quickens. U.S. President Joe Biden has ordered every state to make all adults eligible for vaccination by May 1.
Benchmark ten-year Treasury yields were at 1.6282% on Monday, not far from the record 1.6420% hit on Friday.
The U.S. currency has also been supported as investors pared bets on its decline and cut net short positions to the lowest since mid-November in the week ended Mar. 9, according to U.S. Commodity Futures Trading Commission data released on Friday.
The dollar index has gained 1.8% in 2021, tracking the rise in benchmark yields from below 1%. It fell nearly 7% In 2020, and some investors expect the dollar to resume that move downwards in due course.
“Higher bond yields alone are unlikely to sustain the upswing in USD,” Commonwealth Bank of Australia (OTC:CMWAY) analysts said in a note, adding dollar declines were coming “soon”.
“The move higher in bond yields largely reflects the better economic outlook, which is ultimately a weight on the USD,” the note added.
Bitcoin dropped below the $60,000 mark after surging past a record $61,000 over the weekend. India will reportedly push ahead on a proposed law banning cryptocurrencies and fining anyone trading in the country or even holding such digital assets. The law, if it came into force, would be one of the strictest policies against digital assets.
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