* Dollar/yen jumps after U.S. 10y yield rises 7 bps
* USD steady on other majors
* Kiwi in focus ahead of RBNZ
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Aug 12 (Reuters) - The dollar found support on
Wednesday, as a jump in U.S. yields pushed it higher against the
Japanese yen and investors wagered on a broader and deeper U.S.
coronavirus recovery.
The yield on 10-year U.S. debt US10YT=RR , which rises when
bond prices fall, made its steepest gain in two months overnight
ahead of a record $38 billion auction later on Wednesday. US/
That attracts investment, particularly from Japan where
yields at the front of the curve are pinned around or below
zero, and lifted the dollar by half a percent on the yen JPY=
to 106.53 - where it stayed on Wednesday.
Elsewhere in financial markets, focus was on the political
holdup in Washington over a new stimulus package, which capped
broader investor sentiment.
In Asia, the New Zealand dollar NZD=D3 hit a three-week
low following a fresh coronavirus lockdown in Auckland and ahead
of a crucial central bank policy decision due at 0200 GMT.
The move up in yields is driven by both repositioning ahead
of big issuance this week and a sense that the U.S. recovery is
broadening and looking more robust, said NAB senior FX
strategist Rodrigo Catril.
"That is reflected in the rotation in equities into more
cyclical sectors and plays into the idea that U.S. Treasury
yields should be higher, reflecting that improvement in
prospects for the global recovery," he said.
"Dollar/yen is the most sensitive...but higher U.S. Treasury
yields should in theory be broadly supportive for the dollar."
Against a basket of currencies =USD , the dollar extended a
bounce made last Friday as U.S.-China tensions ratcheted higher
with President Donald Trump's ban on TikTok and WeChat.
It last sat at 93.654. Against the euro EUR=EBS the
greenback was steady at $1.1740 and against the Australian
dollar AUD=D3 it was firm just below a one-week high at
$0.7147.
The dollar index has slumped 9% from a three-year high it
hit in March and lost 4% in July alone, leaving investors
divided over whether the support the greenback has found in
August amounts to a bounce or a pause in its decline.
RBNZ WATCH
Traders in Asia have a wary eye fixed on the Reserve Bank of
New Zealand on Wednesday.
No change in rates is expected, but the bank can often
surprise and a dovish tone is likely -- especially with Auckland
back under lockdown because four new COVID-19 cases were
detected after 102 virus-free days. "It's far too soon to say what the exact implications are,
but the return of COVID-19 presents downside risk to the
outlook," ANZ analysts said in a note on Wednesday.
"The (policy) committee can ill-afford to be complacent, and
need to underscore that they will do what it takes. We thus
expect a very dovish tone, which poses significant downside
risks for the New Zealand dollar."
Most analysts expect an expansion of the central bank's bond
buying programme beyond the current NZ$60 billion and for
negative rates to remain firmly on the table. The kiwi was last at $0.6564, its lowest since July 21.
Elsewhere the pound GBP= was under pressure following poor
labour market data overnight, which showed British job losses
jumping to their highest level in more than a decade last
quarter. U.S. inflation figures due at 1230 GMT are expected to show
consumer price growth drift down to 1.1% on a year-on-year basis
from 1.2% in June.
Investors are also looking for signs that the political
impasse in Washington over the next stimulus programme can be
overcome, with the stalemate weighing on U.S. equities overnight
as Democrats and Republicans blamed each other for the deadlock.