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New York Markets Pre-Open: Dollar slips, yields fall ahead of inflation data

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? Dollar weakens and 10-year yield retreats ahead of inflation data.

? Sterling little changed after Bank of England holds key rate.

? Italy's coalition deadline looms.

? RBS rises on $4.9 billion settlement.

? S&P 500 set to open higher.

The dollar eased against the yen and the euro, and the benchmark 10-year Treasury yield retreated ahead of consumer price inflation data. European shares fell as chances rose that the hard right and populists could form a government, and futures pointed to the S&P 500 opening slightly higher.

Sterling slipped 0.2% against the U.S. dollar by 7:05 a.m. ET after the Bank of England held interest rate at 0.50% in a 7-2 vote.

The euro gained 0.23%, and the dollar fell 0.1% against the yen, as 10-year Treasury yields lost 2 basis points to 2.976% ahead of the inflation data. "The market is priced for a strong [consumer price index], creating risks to the downside," TD Securities said in a note to investors.

The Mexican peso gained 0.67% against the dollar as negotiators from the U.S., Canada and Mexico met in Washington to discuss the North American Free Trade Agreement. The Turkish lira was up 0.24% after the government said it would take measures to reduce the pressure on the currency.

"There are early signs that the vicious circle of higher U.S. rates and a strong [U.S. dollar], negative [emerging market] sentiment, sell-off in EM assets and weakness in EM [foreign exchange] (which then loops to fuel a stronger USD) may well be coming to an end," according to strategists at ING Research. "U.S. CPI data today could see a further shake-out in risky assets."

Brent crude gained 0.18% to $77.36 per barrel on the ICE Futures Exchange as investors grappled with the fallout from the U.S.'s exit from the Iran nuclear deal.

The Euro Stoxx 50 slipped 0.39% and the FTSE 100 fell 0.35% lower, while Germany's DAX index was up by 0.29%. The Shanghai SE Composite rose 0.48% while the Hong Kong's Hang Seng index closed 0.89% higher.

Italy's 10-year bond yields rose 3 basis points after former Prime Minister Silvio Berlusconi gave the green light for a populist coalition government between the far-right League and the anti-establishment 5-Star Movement. The FTSE MIB dropped 1.1% as the deadline neared for the parties to strike a deal.

Gold rose 0.28% to $1,315.80 an ounce.

Royal Bank of Scotland Group PLC's shares jumped 3.6% after news that it agreed in principle to pay $4.9 billion to settle disputes with the U.S. Department of Justice.

The report appears to have removed prospects of additional large scale provisions, Michael Hewson of CMC Markets wrote. RBS posted a profit of £792 million in the first quarter.

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The day ahead:

8:30 a.m. ET — U.S. consumer price index (Econoday consensus: 0.3% monthly, 2.5% yearly)

8:30 a.m. ET — U.S. jobless claims (Econoday consensus: 220,000)

9:45 a.m. ET — U.S. Bloomberg consumer comfort index

10:30 a.m. ET — U.S. EIA natural gas report

2:00 p.m. ET — U.S. Treasury budget (Econoday consensus: $88.0 billion)

4:30 p.m. ET — U.S. Fed balance sheet

4:30 p.m. ET — U.S. money supply