Dollar edges higher on strong data, despite lower yields

NEW YORK: The dollar index edged higher on Thursday in choppy trading as investors balanced bullish data showing US retail sales rebounded sharply in March against a continued drop in US Treasury yields.

Retail sales increased 9.8% last month, the Commerce Department said on Thursday, beating economists' expectations for a 5.9% increase.

A separate report also showed that initial claims for state unemployment benefits totaled a seasonally adjusted 576,000 for the week ended April 10, compared with 769,000 in the prior week. Economists polled by Reuters had forecast 700,000 applications in the latest week.

"This was a one-two punch of really positive data," said Edward Moya, senior market analyst at OANDA in New York.

Dollar strength was capped, however, as Treasury yields dropped to one-month lows, reducing the relative attractiveness of the US currency.

The dollar index earlier on Thursday hit a one-month low of 91.487, before rebounding to 91.633, up 0.03% on the day.

The euro fell 0.07% to $1.1971. The greenback fell 0.15% to 109.73 Japanese yen.

The dollar has been on the back foot this month as Treasury yields stabilize below one-year highs reached last month. Yields have fallen as the US Federal Reserve reiterates its commitment to holding rates near zero for years to come, and on some concerns that a recent uptick in inflation will be temporary.

Strong risk appetite as stocks hit record highs is also seen as denting the appeal of the greenback.

The Australian dollar, a proxy for global risk sentiment, rose 0.36% on Thursday to $0.7749.

Rising geopolitical tensions may be helping demand for safe-haven US bonds on Thursday.

"We're seeing more risks across emerging markets right now, and that's probably going to keep some Treasury demand going," said Moya.

The Russian rouble tumbled on Thursday, at one point losing 2% to the dollar in volatile trade and hitting a more than five-month low versus the euro as the White House announced new sanctions targeting Russia's sovereign debt.

US President Joe Biden on Thursday authorized the move to punish Moscow for interfering in the 2020 US election - allegations Russia denies.

Bitcoin stood near a record high of $64,895 reached on Wednesday, when cryptocurrency platform Coinbase made its debut in Nasdaq in a direct listing. It was last up 0.07% on the day at $63,028.