FOREX-Dollar hovers near two-week low after U.S. yields slip

* Dollar index holds near two-week low
* Aussie, Kiwi dollar slip
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

LONDON, April 7 (Reuters) - The dollar hovered near two-week
lows after U.S. bond yields eased from recent highs, while
market participants waited for the Federal Reserve's meeting
minutes due later in the session to help determine the future
path for the dollar.
The previous quarter saw a spike in U.S. Treasury yields and
the dollar's strongest rally in years, on rising expectations
that accelerating U.S. economic growth and inflation could force
the Fed to abandon its pledge to keep interest rates near zero
until 2024.
The International Monetary Fund said on Tuesday that
unprecedented public spending to fight the pandemic would push
global growth to 6% this year. But the bond market has stabilised so far this week, with
the 10-year U.S. Treasury yield at 1.64%, down from its peak of
1.776% at the end of March US10YT=RR .
At 0716 GMT, the dollar was at 92.368 against a basket of
currencies, close to a two-week low, having fallen from its
recent high of 93.439, which it hit on March 30.
"A large share of the hopes of a U.S. growth boom supported
by state aid and rapid vaccination progress has already been
priced in," Commerzbank FX and EM analyst Esther Reichelt wrote
in a note to clients.
"Further and more pronounced USD gains would only be
justified if this boom also caused rising inflation rates to
which the Fed would have to react with higher interest rates."
Market participants were waiting for the Fed meeting
minutes, due to be released later in the session, for hints
about the Fed policymakers view on rising yields.
"Investors will be scanning the minutes in search of any
'discomfort' among policymakers about rising inflation prospects
and in parallel any hint that the discussion is migrating
towards defining a timeline for tapering asset purchases," ING
strategists wrote in a note.
"Any (even mild) hawkish signal surely bears the risk of
hitting Treasuries, and providing some support to the dollar."
U.S. money markets are pricing in a 25 basis point hike in
December 2022.
Euro-dollar was steady at $1.18705, having strengthened so
far in April EUR=EBS .
So far in 2021, the euro has been driven by prospects of the
economic recovery from COVID-19 in Europe lagging that of the
United States and Britain, but the euro has picked up over the
past week.
Europe's benchmark equity index, the STOXX 600, closed at a
record high on Tuesday, recovering all of its pandemic-driven
losses. "We recently lowered our forecasts for Eurozone GDP growth
this year to 4.3%, from 5% previously. But we do expect a
catch-up as the vaccination rollout accelerates, enabling
restrictions to be eased," UBS said in a note.
"The fact that Europe's STOXX 600 hit a record high on
Tuesday suggests that investors are still looking through the
continent's current reopening delays."
Final euro zone and UK PMIs for March will be published
throughout the morning.
The Australian dollar fell against the dollar, down 0.4% at
0.76385 AUD=D3 , while the New Zealand dollar was down 0.3%
NZD=D3 , both pausing their upward trajectory of the last two
weeks.
The Canadian dollar also fell, hurt by a third wave of the
COVID-19 pandemic in the country. Elsewhere, finance officials from the Group of 20 major
economies are poised to back a $650 billion boost in the IMF's
emergency reserves and extend a freeze on debt payments as part
of an effort to help developing countries still struggling to
combat the COVID-19 pandemic.

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