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US dollar rises amid rising US bond yields

High yields on US Treasuries supported the US dollar in the Asian session on Friday. Strong GDP data and President Joe Biden’s spending plan bolstered hopes for a faster economic recovery.

The underlying yield on the 10-year bond rose 1.64%. The yield changes in inverse proportion to bond prices.

The data showed that US economic growth accelerated in the first quarter, reflecting increases in consumer spending, federal government spending, residential fixed investment, and state and local government spending.

Weekly jobless claims fell to new lows during the pandemic for the week ending April 24, and pending home sales surged in March, signaling that the recovery is gathering momentum.

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Asian markets fell after data showed that China’s manufacturing activity rose at a slower-than-forecast pace in April.

Geopolitical tensions between Beijing and Washington and fears of China’s crackdown on tech companies have further dampened sentiment about risky assets.

The US dollar rebounded to 1.2112 against the euro and 1.3933 against the pound from early lows of 1.2127 and 1.3958, respectively. The dollar is likely to meet resistance at 1.18 versus the euro and 1.365 versus the pound.

The US dollar jumped to 0.9092 against the franc from a previous low of 0.9081. The next key resistance for the US dollar is likely to be seen around the 0.93 level.

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The dollar rose to 1.2286 against the loonie after falling to 1.2268, the lowest level since February 2018. If the US dollar continues to rise, 1.25 may be seen as its next resistance level.

The greenback rebounded slightly to 0.7768 against the Australian dollar and 0.7240 against the New Zealand dollar from previous lows of 0.7784 and 0.7254, respectively. The dollar is likely to meet resistance at 0.75 against the Australian dollar and 0.70 against the NZ dollar.

The US dollar was down to 108.71 against the yen since yesterday’s close at 108.92. The dollar may meet support around 107.

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At the European session, data on the consumer price index of the euro zone for April and data on GDP for the first quarter will be published.

Canada’s February GDP data, US personal income and spending data for March and the University of Michigan consumer sentiment final report for April will be released in the US session.

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