FOREX-Dollar inches lower as Treasury yields hold firm

    * Graphic: World FX rates

 (Updates to late afternoon)
    By Stephen Culp
    NEW YORK, May 17 (Reuters) - The dollar edged lower on Monday as inflation jitters, exacerbated by
record high prices paid in a regional U.S. manufacturing survey, benefited riskier currencies at the
greenback's expense.
    But the U.S. 10-year Treasury yield was little changed as market participants sought clues
regarding the Federal Reserve's tolerance for near- and medium-term inflation.
    "Given that since the dollar's sell-off last week it hasn't been able to bounce much, it tells me that
the driver is not the foreign currency market but the interest rate market," said Marc Chandler, chief
market strategist at Bannockburn Forex in New York. "And without higher interest rates it's hard to see how
the dollar gets much traction."
    The U.S. Federal Reserve is expected to release the minutes from its April monetary policy on Wednesday,
which market participants will scrutinize for clues regarding the central bank's views on current inflation
    "The Fed is still saying they're going to be very patient," Chandler added. "If the U.S. doesn't offer
higher interest rates, the dollar bears the burden, and that's where we are now."
    The Empire State report from the New York Federal Reserve showed a survey record high of prices paid by
manufacturers in New York state as materials producers struggle to keep up with booming demand.
    The dollar index was last down 0.14% at 90.157. The euro gained 0.09% to $1.2159 and
the dollar fell 0.15% to 109.175 Japanese yen.
    As economies re-open for business, resurgent demand combined with supply shortages has put commodity
prices on an upward trajectory.
    Strengthening crude oil prices boosted the Canadian dollar but the Norwegian crown
 lost ground against the greenback. 
    And despite higher metal prices, the Australian dollar also edged lower.
    Chandler believes central bank policy is taking the lead in influencing the value of currencies
typically sensitive to commodity prices.
    Bitcoin dropped to a three-month low after Tesla Inc boss Elon Musk suggested over
the weekend that the electric automaker may have already sold some of its holdings in the digital currency.

    Currency bid prices at 3:06PM (1906 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
 Dollar index                 90.1570        90.2950     -0.14%         0.196%        +90.4290    +90.1440
 Euro/Dollar                  $1.2159        $1.2147     +0.09%         +0.00%        +$1.2169    +$1.2127
 Dollar/Yen                   109.1750       109.3350    -0.15%         +5.70%        +109.4950   +109.0950
 Euro/Yen                     132.74         132.78      -0.03%         +4.59%        +132.9400   +132.5200
 Dollar/Swiss                 0.9026         0.9012      +0.17%         +0.00%        +0.9028     +0.9003
 Sterling/Dollar              $1.4142        $1.4098     +0.32%         +3.52%        +$1.4146    +$1.4078
 Dollar/Canadian              1.2062         1.2104      -0.34%         +0.00%        +1.2136     +1.2061
 Aussie/Dollar                $0.7770        $0.7781     -0.13%         +0.00%        +$0.7787    +$0.7731
 Euro/Swiss                   1.0975         1.0948      +0.25%         +0.00%        +1.0975     +1.0943
 Euro/Sterling                0.8595         0.8611      -0.19%         +0.00%        +0.8631     +0.8595
 NZ                           $0.7216        $0.7250     -0.47%         +0.00%        +$0.7249    +$0.7182
 Dollar/Norway                8.2485         8.2265      +0.41%         +0.00%        +8.2985     +8.2200
 Euro/Norway                  10.0305        9.9920      +0.39%         +0.00%        +10.0746    +9.9869
 Dollar/Sweden                8.3205         8.3341      +0.01%         +0.00%        +8.3679     +8.3213
 Euro/Sweden                  10.1181        10.1171     +0.01%         +0.00%        +10.1584    +10.1104
 (Reporting by Stephen Culp; Additonal reporting by Tommy Wilkes in London; editing by Barbara Lewis;
Editing by Will Dunham)