(Updates prices, adds data outlook, stimulus details)
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Karen Brettell
NEW YORK, Feb 26 (Reuters) - The U.S. dollar gained on
Friday as U.S. government bond yields held near one-year highs,
while riskier currencies such as the Aussie dollar weakened.
Yields have surged as an acceleration in the pace of
vaccinations globally and optimism over improving global growth
bolster bets that inflation will rise. That has also led
investors to price in earlier monetary tightening than the
Federal Reserve and other central banks have signaled.
The dollar move is "a function of what's happening on the
yields side," said Jeremy Stretch, head of G10 FX strategy at
CIBC World Markets. The 10-year yield briefly climbed above the
S&P 500 dividend yield on Thursday, he noted, indicating
"uncertainty that is writ large."
The dollar index =USD rose 0.59% to 90.847, its highest
level in a week.
It gained against the yen JPY=EBS , touching 106.69 for the
first time since September.
The benchmark 10-year Treasury yield US10YT=RR surged
above 1.6% on Thursday for the first time in a year after a weak
seven-year note auction. It was last at 1.45%. U.S. yield increases have accelerated this month as Fed
officials refrain from expressing concern about the yield gains.
“The Fed has not really hinted that that's making them
uncomfortable, so the bond market's going to push that,” said
Edward Moya, senior market analyst at OANDA in New York. “That's
really dictating this move in the dollar.”
Riskier currencies retreated. The Aussie AUD=D4 fell 1.99%
to $0.7713, after topping $0.80 on Thursday for the first time
since February of 2018.
Marshall Gittler, head of research at BDSwiss, said the
Australian dollar was underperforming despite the market
signaling higher growth, likely because the country's central
bank's yield curve control policy would restrain its bond yields
from moving much higher. That, in turn, could limit the
attractiveness of the currency.
The greenback is likely to continue to benefit from safe-
haven flows if risk appetite continues to worsen, and emerging
market currencies may be among the biggest losers.
“There's a big, big concern that this reflation risk is
going to get out of hand and that's going to really pummel the
emerging market currencies, and I think you're going to see that
investors are going to need to reassess their dollar positions,”
said Moya.
Data on Friday showed U.S. consumer spending increased by
the most in seven months in January, while price pressures were
muted. U.S. jobs data for February released next Friday is the next
major economic focus.
Investors are also waiting on details of the U.S. fiscal
stimulus bill, which is expected to be passed in the coming
weeks.
The Democratic-controlled House of Representatives on
Friday was poised to push through President Joe Biden's $1.9
trillion coronavirus aid package, although it looked unlikely to
be able to use the bill to raise the minimum wage nationwide.
The euro EUR=EBS dipped 0.79% to $1.2078 after touching a
seven-week high of $1.2244 on Thursday.
Bitcoin BTC=BTSP fell 0.32% to $46,946. Ethereum
ETH=BTSP dropped 0.7% to $1,468.
========================================================
Currency bid prices at 3:02PM (2002 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 90.8470 90.3270 +0.59% 0.962% +90.9230 +90.1250
Euro/Dollar EUR=EBS $1.2078 $1.2175 -0.79% -1.14% +$1.2185 +$1.2072
Dollar/Yen JPY=D3 106.5850 106.2100 +0.40% +3.24% +106.6850 +105.9000
Euro/Yen EURJPY= 128.73 129.35 -0.48% +1.43% +129.5300 +128.6600
Dollar/Swiss CHF=EBS 0.9090 0.9051 +0.44% +2.75% +0.9102 +0.9027
Sterling/Dollar GBP=D3 $1.3944 $1.4009 -0.46% +2.07% +$1.4025 +$1.3890
Dollar/Canadian CAD=D3 1.2697 1.2605 +0.75% -0.27% +1.2729 +1.2588
Aussie/Dollar AUD=D3 $0.7713 $0.7870 -1.99% +0.27% +$0.7883 +$0.7707
Euro/Swiss EURCHF= 1.0978 1.1016 -0.34% +1.58% +1.1026 +1.0957
Euro/Sterling EURGBP= 0.8659 0.8688 -0.33% -3.11% +0.8730 +0.8657
NZ NZD=D3 $0.7236 $0.7370 -1.85% +0.74% +$0.7381 +$0.7227
Dollar/Dollar
Dollar/Norway NOK=D3 8.6430 8.5010 +1.83% +0.81% +8.6665 +8.5025
Euro/Norway EURNOK= 10.4421 10.3450 +0.94% -0.24% +10.4805 +10.3170
Dollar/Sweden SEK= 8.4303 8.2950 +0.88% +2.85% +8.4347 +8.2815
Euro/Sweden EURSEK= 10.1815 10.0922 +0.88% +1.04% +10.1985 +10.0878
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World FX rates https://tmsnrt.rs/2RBWI5E
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