* U.S. Treasury selloff pulls back, dollar bounce subsides
* Dollar index slips back below 90, EUR/USD at $1.2208
* 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 nearly 7
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. The Australian and New Zealand dollars rose from one-week
lows, lifting the Aussie AUD= above 77 cents again to sit at
$0.7680 and the kiwi over 72 cents to trade at $0.7226. AUD/
The dollar fell through 104 Japanese yen JPY= to trade at
103.63 yen on Wednesday and the Chinese yuan CNH= also held
gains to begin the day at a one-week high in offshore trade.
The moves press the dollar back toward multi-year lows,
although it clung above those levels in Asia as the bounce this
week has tempered some traders' confidence in the consensus view
that U.S. trade and budget deficits will drive it lower.
"The upward correction in the dollar index looks to be over
and the downtrend has resumed," ANZ analysts said in a note.
"But with U.S. asset markets in the driving seat, with
equities setting the scene for risk appetite and U.S. bonds
leading the way in interest rate markets, it's worth asking if
we can take dollar weakness for granted."
The euro EUR= steadied at $1.2208 and dollar index =USD
was steady at 89.991 on Wednesday after falling 0.5% on Tuesday.
Sterling GBP= hit a week-high of $1.3680. GBP/
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 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.
However, strong demand at a $38 billion 10-year auction
overnight and comments from U.S. Federal Reserve officials
reiterating that monetary policy is going to stay supportive
seem to have once more turned the blowtorch on the greenback.
"The market hasn't given up on the short dollar, lower real
yields, long reflation assets trade just yet," said Chris
Weston, head of research at broker Pepperstone in Melbourne.
December U.S. inflation figures are due at 1330 GMT and,
after Kansas City Fed President Esther George said overnight she
does not expect the Fed to react if inflation tips over its 2%
goal, it may take a large surprise to unnerve investors.
Currency bid prices at 9:14AM in Singapore (0114 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2210 $1.2207 +0.03% -0.06% +1.2216 +1.2202
Dollar/Yen JPY=D3 103.6200 103.7250 -0.10% +0.32% +103.7850 +103.6200
Euro/Yen EURJPY= 126.52 126.64 -0.09% -0.32% +126.7100 +126.5000
Dollar/Swiss CHF=EBS 0.8860 0.8866 -0.04% +0.17% +0.8866 +0.8859
Sterling/Dollar GBP=D3 1.3670 1.3670 +0.01% +0.07% +1.3679 +1.3655
Dollar/Canadian CAD=D3 1.2714 1.2712 +0.01% -0.16% +1.2716 +1.2706
Aussie/Dollar AUD=D3 0.7765 0.7775 -0.11% +0.96% +0.7781 +0.7764
NZ NZD=D3 0.7223 0.7228 -0.03% +0.63% +0.7232 +0.7225
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX