Dollar to see second weekly loss

The dollar headed for its worst backto-back weekly drop this year amid an extended retreat in Treasury yields as investors increasingly bought into the Federal Reserve’s insistence of keeping an accommodative policy stance for a while longer.

The benchmark 10-year Treasury yield dipped to a one-month low of 1.528% overnight, moving further away from over a one-year high of 1.776% reached at the end of last month, even in the face of Thursday’s stronger-than-expected retail sales and employment data.

San Francisco Fed President Mary Daly said on the same day that the US economy is still far from making “substantial progress” towards the central bank’s goals of 2% inflation and full employment, the bar the Fed has set for beginning to consider reducing its support for the economy.

That echoed Fed Chair Jerome Powell’s comments in several speeches over the past week that policymakers will look through near-term rises in prices amid ongoing slack in the labour market.

The dollar index, which tracks the greenback against six major peers, dipped to an almost one-month low of 91.487 on Thursday before steadying to 91.654 in the European session.

It’s set for a 0.5% decline for the week, extending the 0.9% slide from the previous week.

The gauge had surged with Treasury yields to an almost-five-month high at 93.439 on the final day of March, on bets that massive fiscal spending coupled with continued monetary easing will spur faster US economic growth and higher inflation.