Morning Bid: Nervous investors put dollar under pressure

A look at the day ahead in European and global markets from Ankur Banerjee

Another day of dollar selling, albeit not an intense one, while Treasury yields remain elevated, keeping investors jittery as they watch for possible developments on U.S. trade deals and worry about the fiscal health of the U.S. economy.

The safe haven yen and Swiss franc were again the main beneficiaries, as well as the euro, hitting their strongest levels in two weeks even though U.S. Treasury yields were on the rise in Asian hours.

Rising Treasury yields usually underpin the dollar, especially against the yen, but that correlation has been weakening over the past month as U.S. President Donald Trump's erratic trade manoeuvres upended global markets and shook investor confidence in U.S. assets.

The spotlight during European trading hours will be on annual earnings from retailer Marks & Spencer, which was hit by a costly cyberattack a month ago, and on British inflation data for April.

The attack on 141-year-old M&S has likely already cost it more than 60 million pounds ($81 million) in lost profit, according to analysts. Wednesday's report will offer details on the attack, which prompted the retailer to suspend online ordering.

Investors will also scour the inflation report, which may influence the Bank of England's monetary policy, to gauge cost pressures following upbeat British GDP data last week.

The BoE cut the bank rate by 25 basis points on May 8 and traders are betting it will deliver another 25 basis-point cut at its next meeting in June.

Economists polled by Reuters estimated that Britain's consumer price index rose 3.3% in April, compared with the previous month's 2.6% rise, mainly due to an increase in regulated tariffs for household utility bills.

A Reuters poll of economists forecast that Britain's economy will grow a bit faster this year than had been expected a month ago, partly due to unexpectedly strong growth in the first quarter.

Long-dated Japanese government bonds found little relief on Wednesday after a poor auction result sent yields to record levels in the previous session.

The steep selloff in bonds is a quandary for the Bank of Japan, which is trying to taper its debt purchases and normalise monetary policy. Rising long-term borrowing costs are also a warning sign for the highly indebted Japanese government.

Key developments that could influence markets on Wednesday:

Economic events: UK inflation data for April

Earnings: JD Sports, Marks & Spencer

Trying to keep up with the latest tariff news?

Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here.

($1 = 0.7448 pounds)

(By Ankur Banerjee; Editing by Edmund Klamann)