* U.S. Treasury selloff pulls back, dollar bounce subsides
* Dollar index slips back below 90, EUR/USD at $1.2214
* Sterling hits one-week high after BoE talks down negative
rates
By Tom Westbrook
SINGAPORE, Jan 13 (Reuters) - The dollar nursed losses on
Wednesday as a retreat in U.S. yields sapped momentum from its
recent rebound and investors cautiously resumed bets that it can
resume sliding.
Benchmark 10-year Treasury yields US10YT=RR fell more than
6 basis points from a 10-month high hit on Tuesday and the
turnaround snuffed out a three-day streak for the dollar. US/
Against the euro, it posted its sharpest daily fall in more
than a month and it dropped more than 1% against the pound,
which was also boosted by the Bank of England governor talking
down the prospect of negative rates. Sterling GBP= made a new one-week high of $1.3693 in Asian
trade on Wednesday, while the euro EUR= steadied at $1.2214.
The Australian and New Zealand dollars rose from one-week
lows, lifting the Aussie AUD= above 77 cents again to sit at
$0.7758 and the kiwi over 72 cents to trade at $0.7220. AUD/
The pullback in yields pushed the dollar below 104 Japanese
yen JPY= to trade at 103.66 yen by midsession in Asia though
moves were slight as dollar bears' conviction wavered.
"People are debating whether (market drivers are) going to
be back toward interest rate differentials," said Paul Mackel,
global head of foreign exchange research at HSBC on an outlook
Zoom call with journalists.
"We don't think that's going to be the case," he said.
"We still think it's going to be this ebb and flow of risk
appetite that has been the dominant feature in the currency
market for the past few quarters," he added, with the outlook
for the dollar soggy but not dire as global growth returns.
The dollar index =USD was steady at 90.004 after falling
0.5% on Tuesday and is not far above last week's nearly
three-year low of 89.206.
Even the Malaysian ringgit MYR= , which was heavily sold as
the country entered a fresh lockdown on Tuesday, was able to
creep higher to 4.0400 per dollar. EMRG/FRX
GREAT EXPECTATIONS
The bond-market selloff that has driven U.S. yields sharply
higher this year and stalled the dollar's decline was triggered
by Democrats winning control of U.S. Congress at elections in
Georgia last week.
Investors expect that to usher in huge sums in government
borrowing to fund big-spending stimulus plans and have figured
that higher U.S. rates might make dollars more attractive.
Mixed signals from some U.S. Federal Reserve members as to
how much longer policy can stay so accommodative also dragged on
Treasuries.
However, strong demand at a $38 billion 10-year auction
overnight and remarks from Boston Fed President Eric Rosengren
and Kansas City Fed President Esther George have allayed some of
those concerns ahead of a busy schedule of Fed speakers.
December U.S. inflation figures are also due at 1330 GMT,
with expectations for annual core CPI to hold steady at 1.6%.
"Now, there is a reason to be bearish dollars if you want
one, when one contrasts those prints with the near-deflation
being experienced in Europe and Japan and China," said Rabobank
global strategist Michael Every in a note to clients.
"That's the kind of parting of the ways you get between
economies relying on domestic demand and consumption and those
relying more on investment or net exporting."
Later on Wednesday, Reserve Bank of St. Louis President
James Bullard is due to participate in a discussion on monetary
policy at a Reuters Next Virtual Forum at 1430 GMT.
Federal Reserve Board Governor Lael Brainard and Vice Chair
Richard Clarida are also due to speak on Wednesday and the Fed
issues its "Beige Book" of economic indicators at 1900 GMT. Fed
Chair Jerome Powell is due to speak on Thursday.