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Tom Westbrook

FOREX-Dollar eyes stellar week as Fed sends bears scurrying

Jun 18 2021

* Fed's hawkish shift has dollar up 1.5% this week; shorts bailing

FOREX-Vicious post-Fed bounce has dollar headed for year's best week

Jun 17 2021

* Fed's hawkish shift has dollar up 1.5% this week; shorts bailing

Bitcoin tops $40,000 after Musk says Tesla could use it again

Jun 14 2021

LONDON/SINGAPORE (Reuters) -Bitcoin climbed above $40,000 on Monday, after yet another weekend of price swings following tweets from Tesla boss Elon Musk, who fended off criticism over his market influence and said Tesla sold bitcoin but may resume transactions using it. | Video

TREASURIES-Bears bail out as 10-year Treasuries eye best week in a year

Jun 11 2021

* Ten-year yield hits 3-month low, investors rush to cover shorts * Ten-year yield down as much as 13 bps this week, steepest fall in 1 yr * Another new record for Fed's reverse repo facility (Updates with market activity, analyst comment, Fed facility details) By Ross Kerber and Tom Westbrook BOSTON / SINGAPORE, June 11 Benchmark 10-year U.S. Treasury yields were close to their biggest weekly decline in a year on Friday as the market deemed a spike in inflation to be transitory, squeezing bears out of short positions. The 10-year yield, which falls when prices rise, was nearly unchanged at 1.4603% on Friday afternoon after touching as low as 1.428% earlier in the session, its lowest since early March. At that point, the yield had fallen roughly 13 basis points for the week, the steepest weekly drop since last June. Traders said short-covering was driving the bond rally, in a market that remains the recipient of enormous Federal Reserve support, after U.S. inflation data on Thursday was dismissed as insufficiently scary to prompt early tapering of stimulus. TD Securities global head of rates strategy Priya Misra said the pattern was triggered once the benchmark yield fell below 1.5%, the low end of its range in recent weeks, on June 9. That would have prompted an exit from many "steepener" trades and meant investors were buying longer-term debt since then, she said. "I see this more as flow-driven trading rather than fundamentals," she said of Friday's patterns. Kim Rupert, senior economist for Action Economics, said the move back up in yields on Friday also reflected investment strategies as traders positioned ahead of comments due from U.S. Federal Reserve officials next week. "Today was just a little unwinding, people taking chips off the table," she said. The Fed accepted all $547.8 billion in bids submitted into its reverse repurchase facility on Friday, a fifth consecutive record amount. Money fund managers have embraced the facility as a place to park cash, putting pressure on short-term interest rates. The one-month Treasury bill was at 0.0076%, just above the 0% level it last touched on May 28. A reopening U.S. economy meant year-on-year consumer prices did rise 5%, the biggest jump in nearly 13 years, data on Thursday showed. But big contributions from price rises for airline tickets and used cars were seen as unsustainable and in keeping with the Fed's forecasts for a temporary spike. Short positions in Treasuries had hit their highest since 2018, according to JP Morgan positioning data last week. Their unwinding has flattened the yield curve to push the gap between policy-sensitive 2-year notes and 10-year notes as low as 128 basis points early in Friday's trading, its narrowest in three months. It was last at 131 basis points, two basis points higher than Thursday's close. The gap between 5-year notes and 30-year bonds was at 140 basis points, about a basis point lower than Thursday's close. At the long end of the curve, the 30-year yield was at 2.1462% and touched as low as 2.122%, the lowest since late February. June 11 Friday 2:16 PM New York / 1816 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0275 0.0279 0.003 Six-month bills 0.0375 0.038 -0.003 Two-year note 99-243/256 0.1509 0.000 Three-year note 99-210/256 0.3102 0.008 Five-year note 100-6/256 0.7452 0.013 Seven-year note 100-168/256 1.1516 0.010 10-year note 101-132/256 1.4603 0.001 20-year bond 102-236/256 2.0702 -0.004 30-year bond 105-8/256 2.1462 -0.008 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 0.50 spread U.S. 3-year dollar swap 9.75 0.75 spread U.S. 5-year dollar swap 7.25 0.25 spread U.S. 10-year dollar swap -2.75 0.00 spread U.S. 30-year dollar swap -30.75 -0.50 spread (Reporting by Ross Kerber in Boston and by Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa and Nick Zieminski)

TREASURIES-Bears bail out as 10-year Treasuries eye best week in a year

Jun 11 2021

* Ten-year yield hits 3-month low, investors rush to cover shorts * Ten-year yield down nearly 13bps this week, steepest fall in 1yr * 2s/10s spread hits narrowest since Feb (Updates with market activity, analyst comment) By Ross Kerber and Tom Westbrook BOSTON / SINGAPORE, June 11 Benchmark 10-year U.S. Treasury yields were close to their biggest weekly decline in a year on Friday as the market deemed a spike in inflation to be transitory, squeezing bears out of short positions. The 10-year yield, which falls when prices rise, was down about a basis point at 1.4502% on Friday after touching as low as 1.428% earlier in the session, its lowest since early March. At that point, the yield had fallen roughly 13 basis points for the week so far, the steepest weekly drop since last June. Traders said short-covering was driving the bond rally, in a market which remains the recipient of enormous Federal Reserve support, after U.S. inflation data on Thursday was dismissed as insufficiently scary to prompt early tapering of stimulus. TD Securities' Global Head of Rates Strategy Priya Misra said the pattern was triggered once the benchmark yield fell below 1.5%, the low end of its range in recent weeks, on June 9. That would have prompted an exit from many "steepener" trades and meant investors were buying longer-term debt since then, she said. "I see this more as flow-driven trading rather than fundamentals," she said of Friday's patterns. Year-on-year consumer prices did rise 5%, the biggest jump in nearly 13 years, but big contributions from price rises for airline tickets and used cars were seen as unsustainable and in keeping with the Fed's forecasts for a temporary spike. "The market is short bonds, and has been trading that re-flation theme since last September," said Imre Speizer, a market strategist at Westpac in New Zealand. "Traders have been holding on to old, stale positions and the market needs news to endorse those positions. This didn't endorse it, so more of those traders have just capitulated," he said. Short positions in Treasuries had hit their highest since 2018, according to JP Morgan positioning data last week. Their unwinding has flatted the yield curve to push the gap between policy-sensitive 2-year notes and 10-year notes as low as 128 basis points early in Friday's trading, its narrowest in three months. It was last at 131 basis points, two basis point higher than Thursday's close. The gap between 5-year notes and 30-year bonds was at 142 basis points, less than a basis point higher than Thursday's close. At the long end of the curve, the 30-year yield was at 2.1455% and touched as low as 2.122%, the lowest since late February. June 11 Friday 9:30AM New York / 1330 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0275 0.0279 0.003 Six-month bills 0.04 0.0406 0.000 Two-year note 99-244/256 0.149 -0.002 Three-year note 99-220/256 0.2971 -0.005 Five-year note 100-28/256 0.7275 -0.004 Seven-year note 100-192/256 1.1376 -0.004 10-year note 101-156/256 1.4502 -0.009 20-year bond 103 2.0655 -0.008 30-year bond 105-12/256 2.1455 -0.009 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 0.50 spread U.S. 3-year dollar swap 10.00 1.00 spread U.S. 5-year dollar swap 7.00 0.00 spread U.S. 10-year dollar swap -3.00 -0.25 spread U.S. 30-year dollar swap -30.75 -0.50 spread (Reporting by Ross Kerber in Boston and by Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa and Nick Zieminski)

FOREX-Dollar marooned as investors shrug off inflation spike

Jun 11 2021

* U.S. CPI leaps to near 13-year high of 5% y/y * Seen as transitory due to one-off pressures; dollar slips * "The market believes the Fed" - analyst * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E By Tom Westbrook SINGAPORE, June 11 After a week of anxious waiting, markets got the high U.S. inflation number they dreaded, then shrugged it off and moved on - leaving the U.S. dollar under pressure and most majors stuck in ranges. Early in the Asia session the greenback nursed small losses, as traders figured there were enough one-offs in last month's 0.6% rise in consumer prices to support the Federal Reserve's insistence that inflation was likely to be transitory. The dollar bought 109.44 yen and was headed for a small weekly loss. It was also on track for modest weekly losses on the Aussie dollar and British pound, last trading at $0.7752 per Aussie and $1.41825 per pound. A dovish commitment from the European Central Bank to stick with its elevated tempo of bond buying held the euro in check at $1.2189. "What we're seeing is a market that believes in the Fed," said Chris Weston, head of research at broker Pepperstone in Melbourne, as investors temper worries that the strong recovery in the United States prompts early rate hikes. "We're going to get tapering," he said. "But it's going to get done a such a snail's pace." The data overnight showed U.S. consumer prices up 5% year-on-year, the sharpest rise in more than a dozen years and core inflation surging 0.7% in a month. But hefty contributions from short-term rises in airline ticket prices and used cars helped convince traders it was not going to drive interest rates higher any time soon. "It basically fit the Fed script, that we'd get a burst but it's going to be temporary," said Westpac currency analyst Imre Speizer. "This report is consistent with that, it doesn't argue against it. I think the market needed something that argued against it to push the U.S. dollar higher." The U.S. dollar index fell slightly after the inflation figures were published and last sat at 89.974, down very slightly for the week. Benchmark 10-year U.S. Treasuries actually rallied to a three-month high in the wake of CPI, as short sellers quit bets on rising yields. The 10-year yield was last at 1.4434% after dipping to a three-month low of 1.4320% earlier Friday. It was as high as 1.6350% a week earlier. Focus now turns to the Fed's meeting next week, although traders now say that there may not be much of a shift in rhetoric which has played down the need to taper stimulus. A plan for reducing bond buying is expected to be announced in August or September a Reuters poll of economists found, but it isn't forecast to begin until next year. The South Korean won firmed 0.2% to 1,110.08 per dollar after the central bank governor hinted at normalising policy, in an advance copy of a speech to be delivered later on Friday. Indonesia's rupiah gained about 0.4% to 14,187 per dollar as lower U.S. Treasury yields boosted the attraction of Indonesian bonds. Cryptocurrencies looked to close out the week on a stronger footing, with bitcoin seemingly well supported above $35,000 despite more talk of global regulatory scrutiny. The digital token last traded at $37,163.52 and on track for a 3.5% weekly advance. ======================================================== Currency bid prices at 551 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.2188 $1.2176 +0.10% -0.25% +1.2192 +1.2171 Dollar/Yen 109.4200 109.3150 +0.10% +5.94% +109.4450 +109.3900 Euro/Yen <EURJPY=EB 133.36 133.08 +0.21% +5.07% +133.3700 +133.1100 S> Dollar/Swiss 0.8939 0.8946 -0.07% +1.05% +0.8950 +0.8935 Sterling/Dollar 1.4175 1.4176 +0.00% +3.77% +1.4185 +1.4170 Dollar/Canadian 1.2087 1.2095 -0.07% -5.09% +1.2098 +1.2086 Aussie/Dollar 0.7755 0.7753 +0.02% +0.80% +0.7757 +0.7746 NZ 0.7193 0.7196 -0.03% +0.18% +0.7199 +0.7188 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Tom Westbrook. Editing by Shri Navaratnam & Simon Cameron-Moore)

FOREX-Dollar marooned as investors shrug off inflation spike

Jun 10 2021

* U.S. CPI leaps to near 13-yr high of 5% y/y * Seen as transitory due to one-off pressures; dollar slips * "The market believes the Fed" - analyst * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E By Tom Westbrook SINGAPORE, June 11 After a week of anxious waiting, markets got the high U.S. inflation number they dreaded, shrugged it off and moved on - leaving the U.S. dollar under pressure and most majors stuck in ranges. Early in the Asia session the greenback nursed small losses, as traders figured there were enough one-offs in last month's 0.6% rise in consumer prices to support the Federal Reserve's insistence that inflation was likely to be transitory. The dollar bought 109.37 yen and was headed for a small weekly loss. It was also on track for modest weekly losses on the Aussie dollar and British pound, last trading at $0.7748 per Aussie and $1.4171 per pound. A dovish commitment from the European Central Bank to stick with its elevated tempo of bond buying held the euro in check at $1.2175. "What we're seeing is a market that believes in the Fed," said Chris Weston, head of research at broker Pepperstone in Melbourne, as investors temper worries that the strong recovery in the United States prompts early rate hikes. "We're going to get tapering," he said. "But it's going to get done a such a snail's pace." The data overnight showed U.S. consumer prices up 5% year-on-year, the sharpest rise in more than a dozen years and core inflation surging 0.7% in a month. But hefty contributions from short-term rises in airline ticket prices and used cars helped convince traders it was not going to drive interest rates higher any time soon. "It basically fit the Fed script, that we'd get a burst but it's going to be temporary," said Westpac currency analyst Imre Speizer. "This report is consistent with that, it doesn't argue against it. I think the market needed something that argued against it to push the U.S. dollar higher." The U.S. dollar index fell slightly after the inflation figures were published and last sat at 90.041, more or less flat for the week. Benchmark 10-year U.S. Treasuries actually rallied to a three-month high in the wake of CPI, as short sellers capitulated, and quit bets on rising yields. Focus now turns to the Fed's meeting next week, although traders now say that there may not be much of a shift in rhetoric which has played down the need to taper stimulus. A plan for reducing bond buying is expected to be announced in August or September a Reuters poll of economists found, but it isn't forecast to begin until next year. Ahead of the onshore trading band fix, China's yuan was steady at 6.3853 per dollar offshore. The South Korean won traded firmly after the central bank governor hinted at normalising policy, in an advance copy of a speech to be delivered later on Friday. Cryptocurrencies looked to close out the week steady, with bitcoin seemingly well supported about $35,000 despite more talk of global regulatory scrutiny. ======================================================== Currency bid prices at 113 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.2180 $1.2176 +0.03% -0.31% +1.2180 +1.2171 Dollar/Yen 109.4100 109.3150 +0.00% +5.83% +109.4450 +0.0000 Euro/Yen <EURJPY=EB 133.24 133.08 +0.12% +4.98% +133.2800 +133.1100 S> Dollar/Swiss 0.8943 0.8946 -0.03% +1.09% +0.8950 +0.8943 Sterling/Dollar 1.4174 1.4176 -0.02% +3.74% +1.4178 +1.4170 Dollar/Canadian 1.2088 1.2095 -0.04% -5.06% +1.2098 +1.2090 Aussie/Dollar 0.7754 0.7753 +0.03% +0.81% +0.7757 +0.7747 NZ 0.7193 0.7196 -0.04% +0.17% +0.7199 +0.7188 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Tom Westbrook. Editing by Shri Navaratnam)

FOREX-Dollar teeters as inflation test looms

Jun 09 2021

* Rangebound trade ahead of inflation and ECB * DXY at 90.090, EUR/USD holding below $1.22 * Dollar seen vulnerable to inflation surprises on either side * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E By Tom Westbrook SINGAPORE, June 9 The dollar clung to its recent small bounce on Wednesday as traders looked to upcoming U.S. inflation data and a European Central Bank (ECB) meeting to gauge the pace of global recovery and policymakers' thinking about pulling back on stimulus. Investors have piled up bets against the dollar, but are growing nervous about whether the beginning of the end of enormous monetary stimulus is nigh - and worry that interest rate rises could end a 15-month dollar downtrend. Some think tapering could be hastened, and the dollar boosted, if U.S. inflation runs hotter than the 0.4% monthly clip that economists expect. For the ECB, the focus is on any signs of an imminent slowdown to its bond buying programme. Both are due on Thursday and the anticipation has all but killed volatility in major currencies, as traders assume a wait-and-see stance. The euro was steady at $1.2179 in the Asia session, while the dollar held at 109.47 yen. Deutsche Bank's Currency Volatility Index hit its lowest level since February 2020 on Tuesday. The U.S. dollar index was parked at 90.090. "Markets need reassurance that the global economic recovery isn't under threat from either dangerous strains of COVID, or from the Fed being forced to change tack (on stimulus) much earlier than expected," said Societe Generale currency strategist Kit Juckes. "So far, the vaccines appear to work and while distribution is uneven ... it's still accelerating overall," he said. "That's cause for hope. For markets though, it means that risk assets need regular reassurance that the Fed isn't going to tighten sooner than expected. And so, we wait for Thursday's CPI data, then next week's FOMC." The Australian and New Zealand dollars were firmly entrenched in narrow bands, with the Aussie at $0.7741, roughly the middle of the past two months' range, and the kiwi travelling likewise at $0.7197. Sterling has also stalled as doubt has crept in over whether rising cases of the coronavirus' Delta variant in Britain could delay business reopening plans scheduled for June 21. It last bought $1.4155. BOC, ECB, CPI Leading in to the U.S. inflation figures, Chinese producer price data for May showed the biggest jump in a dozen years - signalling that factories are not absorbing higher raw material costs and that price pressure is flowing down supply chains. Canadian dollar traders were also on edge ahead of a central bank meeting on Wednesday. The bank is expected to leave rates on hold but flag further tapering of asset purchases, with any surprises on the size or speed liable to boost the loonie. However, the week's major focus is on inflation, and the ECB and traders see both events bringing risks on all sides. "U.S. economists are expecting a 0.4% month-on-month rise in both the headline and the core inflation numbers - they're big numbers," said Commonwealth Bank of Australia currency strategist Joe Capurso. "I think the risk is they fall short of that," he said. That could pull down U.S. yields and bring the dollar with them, Capurso added, unless the figure spooked stock markets enough to drive safe-haven flows into the dollar. The ECB is expected to keep policy settings steady, but the euro is likely to be sensitive to changes in the bank's economic forecasts or any signal that the pace of bond buying could be reduced in months ahead. Elsewhere, China's yuan was steady around the 6.4 per dollar level on Wednesday, as a bill aimed at competing with China cleared the U.S. Senate, damping yuan bulls' recent enthusiasm. Bitcoin recovered from a three-week low it hit on Tuesday when signs of institutional investor caution and regulatory attention drove selling. It last bought $32,754. ======================================================== Currency bid prices at 444 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.2179 $1.2173 +0.05% -0.32% +1.2185 +1.2172 Dollar/Yen 109.4650 109.4650 +0.03% +6.01% +109.5000 +109.4150 Euro/Yen <EURJPY=EB 133.32 133.28 +0.03% +5.04% +133.3600 +133.2100 S> Dollar/Swiss 0.8965 0.8969 -0.04% +1.33% +0.8970 +0.8963 Sterling/Dollar 1.4155 1.4153 +0.07% +3.66% +1.4168 +1.4148 Dollar/Canadian 1.2108 1.2116 -0.05% -4.90% +1.2117 +1.2103 Aussie/Dollar 0.7739 0.7737 +0.03% +0.61% +0.7744 +0.7734 NZ 0.7199 0.7194 +0.08% +0.25% +0.7203 +0.7189 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Tom Westbrook; Editing by Kenneth Maxwell)

FOREX-Dollar teeters as inflation test looms

Jun 08 2021

* Rangebound trade ahead of inflation and ECB * DXY at 90.107, EUR/USD holding below $1.22 * Dollar seen vulnerable to inflation surprises on either side * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E By Tom Westbrook SINGAPORE, June 9 The dollar clung to a small bounce on Wednesday as traders looked to upcoming U.S. inflation data and a European Central Bank (ECB) meeting to gauge the global recovery and policymakers' thinking. Investors have piled up bets against the dollar, but are growing nervous about whether the beginning of the end of enormous monetary stimulus is nigh - and worry that interest rate rises could end a 15-month dollar downtrend. Some think tapering could be hastened, and the dollar boosted, if U.S. inflation runs hotter than the 0.4% monthly clip that economists expect. For the ECB, the focus is on any signs of an imminent slowdown to its bond buying programme. Both are due on Thursday and the anticipation has all but killed volatility in major currencies, as traders assume a wait-and-see stance. The euro was steady at $1.2174 early in the Asia session, while the dollar held firm at 109.42 Japanese yen. Deutsche Bank's Currency Volatility Index hit its lowest level since February 2020 overnight. The U.S. dollar index is parked at 90.107. "Markets need reassurance that the global economic recovery isn't under threat from either dangerous strains of COVID, or from the Fed being forced to change tack (on stimulus) much earlier than expected," said Societe Generale currency strategist Kit Juckes. "So far, the vaccines appear to work and while distribution is uneven ... it's still accelerating overall," he said. "That's cause for hope. For markets though, it means that risk assets need regular reassurance that the Fed isn't going to tighten sooner than expected. And so, we wait for Thursday's CPI data, then next week's FOMC." The Australian and New Zealand dollars were firmly entrenched in narrow bands, with the Aussie at $0.7741, roughly the middle of the past two months' range, and the kiwi travelling likewise at $0.7197. Sterling has also stalled as doubt has crept in over whether rising cases of the coronavirus' Delta variant in Britain could delay business reopening plans scheduled for June 21. It last bought $1.4155. BOC, ECB, CPI Chinese consumer and producer prices are due later on Wednesday, with the latter lately rising quickly as factories pass on rising raw material prices. A further jump could signal more price pressure flowing through global supply chains. Canadian dollar traders were also on edge ahead of a central bank meeting on Wednesday. The bank is expected to leave rates on hold but flag further tapering of asset purchases, with any surprises on the size or speed liable to boost the loonie. However, the week's major focus is on inflation, and the ECB and traders see both events bringing risks on all sides. "U.S. economists are expecting a 0.4% month-on-month rise in both the headline and the core inflation numbers - they're big numbers," said Commonwealth Bank of Australia currency strategist Joe Capurso. "I think the risk is they fall short of that," he said. That could pull down U.S. yields and bring the dollar with them, Capurso added, unless the figure spooked stock markets' enough to drive safe-haven flows into the dollar. The ECB is expected to keep policy settings steady, but the euro is likely to be sensitive to changes in the bank's economic forecasts or any signal that the pace of bond buying could be reduced in months ahead. Elsewhere, China's yuan was steady around the 6.4 per dollar level in offshore trade on Wednesday, as sweeping laws aimed at competing with China cleared the U.S. Senate, damping yuan bulls' recent enthusiasm. Bitcoin recovered from a three-week low it hit on Tuesday when signs of institutional investor caution and regulatory attention drove selling. It last bought $32,914. ======================================================== Currency bid prices at 131 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.2174 $1.2173 +0.01% -0.36% +1.2178 +1.2172 Dollar/Yen 109.4200 109.4650 -0.03% +5.94% +109.5000 +109.4150 Euro/Yen <EURJPY=EB 133.22 133.28 -0.05% +4.96% +133.3200 +133.2100 S> Dollar/Swiss 0.8967 0.8969 -0.01% +1.37% +0.8970 +0.8968 Sterling/Dollar 1.4156 1.4153 +0.04% +3.63% +1.4162 +1.4148 Dollar/Canadian 1.2108 1.2116 -0.06% -4.91% +1.2117 +1.2108 Aussie/Dollar 0.7741 0.7737 +0.06% +0.64% +0.7743 +0.7736 NZ 0.7196 0.7194 +0.05% +0.22% +0.7202 +0.7189 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Tom Westbrook; Editing by Kenneth Maxwell)

FOREX-Dented by jobs miss, dollar on backfoot ahead of CPI

Jun 07 2021

* Euro approaches $1.22 as dollar bounce fades * Dollar/yen back below 110; dollar/yuan back below 6.4 * Thursday brings U.S. CPI, ECB * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E By Tom Westbrook SINGAPORE, June 7 The dollar began the week on the defensive after being dented by a second batch of disappointing jobs figures, as traders turned to whether upcoming inflation data could add pressure on policymakers to taper monetary stimulus. The possibility of a slowdown in bond buying is also in focus leading up to a European Central Bank meeting on Thursday, and both concerns kept a lid on price moves in Asia. The euro steadied around $1.2168, a recovery from a drop to $1.2104 on Friday before the U.S. dollar fell broadly. As the greenback nursed losses, the Australian and New Zealand dollars spent the Asia session above 77 cents and 72 cents, respectively, and the dollar fell 0.1% to 109.61 yen . The Chinese yuan, which has been on a tear in recent weeks, wobbled around 6.4 per dollar after data showed China's export growth missed forecasts while imports surged. "Friday's slightly softer-than-expected U.S. May employment numbers stand to set the tone for the weeks ahead," ING Bank analysts said in a note to clients. "This provides the excuse for the (U.S. Federal Reserve) to say that substantial progress towards its goals has not been achieved and to defer the tapering debate a little longer." The Fed is holding rates at near zero and buys $120 billion in bonds every month in order to suppress financing costs and hence support economic growth -- but policymakers have begun inching toward a discussion about winding that help back. Friday's jobs data, which showed U.S. non-farm payrolls increasing by 559,000 in May, fell 90,000 jobs short of expectations and seemed to allay fears of premature policy tightening and higher rates driving a firmer U.S. dollar. But nerves are persisting ahead of what is likely to be another hot inflation reading on Thursday, and analysts see risks on all sides and the coming weeks as pivotal. "How the dollar performs today may set the tone into the June Fed meeting next week," said analysts at OCBC Bank. "Our bias is for the floor under the dollar to hold out for now, at least until the ECB and U.S. CPI on Thursday." ING analysts think the dollar could "stay gently offered" if it gets past Thursday unscathed, while strategists at the Commonwealth Bank of Australia see it at risk of a drop. "We think inflation could fall short of elevated expectations and pull down the dollar," said CBA's Kim Mundy. Short bets against the dollar increased a tiny bit last week as Fed officials insist the recovery has a long way to run and they will not rush to react to short-term data points. Elsewhere, the market's focus is also on tapering ahead of a Bank of Canada meeting on Wednesday and the ECB on Thursday, where changes are seen as unlikely but some analysts see adjustments to the pace of Europe's bond buying programme. "We expect a 'technical adjustment' ... with a 'slightly lower' pace through Q3," Rabobank analysts said in a note. "But we acknowledge the risks are skewed towards a delay of any such slowdown." ======================================================== Currency bid prices at 530 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.2162 $1.2167 -0.04% -0.46% +1.2173 +1.2161 Dollar/Yen 109.4850 109.5100 -0.07% +5.94% +109.6300 +109.4050 Euro/Yen <EURJPY=EB 133.15 133.26 -0.08% +4.91% +133.3800 +133.1200 S> Dollar/Swiss 0.8993 0.8991 +0.00% +1.63% +0.8996 +0.8989 Sterling/Dollar 1.4141 1.4164 -0.15% +3.51% +1.4169 +1.4139 Dollar/Canadian 1.2088 1.2074 +0.12% -5.07% +1.2095 +1.2074 Aussie/Dollar 0.7733 0.7742 -0.10% +0.54% +0.7748 +0.7731 NZ 0.7204 0.7212 -0.09% +0.33% +0.7215 +0.7203 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Editing by Lincoln Feast and Jacqueline Wong)

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