News: FOREX-Dollar firms on sudden spike in U.S. Treasury yields

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    • U.S. dollar firms after hitting seven-week low
    • 10-year U.S. Treasury yield pops to 1.6%
    • Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

    (Updates prices, adds byline)

    The dollar index lifted off a seven-week low on Thursday after yields on 10-year U.S. Treasuries jumped as high as 1.6% following weaker than expected bids in a U.S. government debt auction.

    The move was the latest example of currency markets taking their cue from bonds, which have been moving on the changing outlook for economic growth and inflation following unprecedented government stimulus and monetary easing along with increasing COVID-19 vaccinations.

    The dollar was up 0.13% against a basket of currencies =USD in the early New York afternoon after dipping as much as 0.26% to 89.677, its lowest since Jan. 8.

    The 10-year Treasury yield US10YT=RR was 1.50%, still up 11 basis points on the day. The rise in bond yields, after adjusting for inflation, has accelerated in recent days, indicating a growing belief that central banks may begin to pare back ultra-loose policies, even as officials maintain a dovish rhetoric.

    "It has been a global move," said Vassili Serebriakov, an FX strategist at UBS in New York. "Those higher bond yields are a symptom of expectations of a strong economic rebound after the pandemic."

    Data on Thursday showed that fewer Americans filed new claims for unemployment benefits last week amid falling COVID-19 infections.

    Federal Reserve Chair Jerome Powell reiterated on Wednesday that the U.S. central bank would not tighten its policy until the economy improves.

    Commodity-linked currencies, including the Australian, New Zealand and Canadian dollars, all hit three-year highs earlier in the day as their bond yields surged.

    "The U.S. has actually lagged a lot of these other countries in terms of the yield moves,” said Erik Nelson, a macro strategist at Wells Fargo in New York, noting that New Zealand’s 10-year government bond yield had gained 18 basis points on Thursday. NZ10YT=RR

    The Aussie AUD=D3 reached $0.8007 against the greenback and was last down 1% at $0.7882. New Zealand's kiwi hit $0.7463 and then fell, last off 0.8% for the day.

    The Canadian dollar CAD=D3 got as far as 1.2468 per U.S. dollar, but was last at $1.2569. The euro rose to a three-week high, gaining 0.5% before backing off. It was last up 0.04% at $1.2175. EUR=EBS

    The safe-haven Japanese yen, which tends to underperform when global growth improves, weakened as far as 106.29 yen per dollar. JPY=D3

    “Some of the currencies that typically don’t do well in a global rebound are lagging,” Serebriakov said. Changes in the dollar have been different against different currencies recently. "It’s not just across the board the way it was last year when everything was driven by U.S. real yields falling and selling dollars across the board.”

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    	Currency bid prices at 1:43PM (1843 GMT) 
    
     Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	   High Bid	Low Bid 
    											  Previous				   Change					
    											  Session											  
     Dollar index	  =USD	   90.1470		90.0450	 +0.13%		 0.184%		+90.2650	+89.6770 
     Euro/Dollar	   EUR=EBS	$1.2175		$1.2170	 +0.04%		 -0.36%		+$1.2244	+$1.2140 
     Dollar/Yen		JPY=D3	 106.0450	   105.8600	+0.16%		 +2.65%		+106.3950   +105.8800 
     Euro/Yen		  EURJPY=	129.10		 128.79	  +0.24%		 +1.72%		+129.9700   +128.7900 
     Dollar/Swiss	  CHF=EBS	0.9052		 0.9065	  -0.14%		 +2.32%		+0.9081	 +0.9029 
     Sterling/Dollar   GBP=D3	 $1.4020		$1.4143	 -0.84%		 +2.65%		+$1.4182	+$1.4001 
     Dollar/Canadian   CAD=D3	 1.2569		 1.2515	  +0.45%		 -1.28%		+1.2590	 +1.2468 
     Aussie/Dollar	 AUD=D3	 $0.7882		$0.7968	 -1.08%		 +2.46%		+$0.8007	+$0.7874 
     Euro/Swiss		EURCHF=	1.1021		 1.1029	  -0.07%		 +1.98%		+1.1097	 +1.1015 
     Euro/Sterling	 EURGBP=	0.8681		 0.8604	  +0.89%		 -2.86%		+0.8697	 +0.8597 
     NZ				NZD=D3	 $0.7379		$0.7443	 -0.85%		 +2.77%		+$0.7464	+$0.7370 
     Dollar/Dollar																					 
    
     Dollar/Norway	 NOK=D3	 8.4895		 8.3720	  +1.53%		 -1.01%		+8.5055	 +8.3200 
     Euro/Norway	   EURNOK=	10.3370		10.1916	 +1.43%		 -1.23%		+10.3520	+10.1759 
     Dollar/Sweden	 SEK=	   8.2830		 8.2747	  +0.21%		 +1.06%		+8.2998	 +8.2067 
     Euro/Sweden	   EURSEK=	10.0850		10.0642	 +0.21%		 +0.09%		+10.0964	+10.0410 
    	<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
    World FX rates	https://tmsnrt.rs/2RBWI5E 
    
    	^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>                    
 
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