* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Saikat Chatterjee
LONDON, March 15 (Reuters) - The dollar gained for a second
consecutive session on Monday as traders cut their bearish
dollar bets to four-month lows on rising U.S. Treasury yields
ahead of key central bank meetings.
Gains in the greenback were more pronounced against
low-yielding currencies such as the euro EUR= and the British
pound GBP=D3 while high-yielding currencies like the
Australian dollar AUD=D3 fared relatively better.
"Monday's trading theme is a continuation of the pattern we
have seen in March and we have to see what the Fed does later
this week to see if the rise in bond yields and dollar strength
versus low yielders can carry on," Kenneth Broux, an FX
strategist at Societe Generale in London, said.
The U.S., Japanese and British central banks, along with
those in some key emerging markets, are all set to meet this
week, with benchmark 10-year Treasury yields US10YT=RR trading
at 1.6320% on Monday, close to Friday's top of 1.6420%, a level
last seen in February. Rising U.S. yields have lifted the greenback 2% so far this
year thanks to widening interest rate differentials relative to
other major bond markets. The dollar declined more than 4% in
the last quarter of 2020.
The dollar index =USD , which tracks the U.S. currency
against six major peers, held at around 91.84 in early London
trading. It hit a late November 2020 high of 92.51 last week.
The U.S. currency has been supported by a paring of bets for
its decline, with speculators cutting net short positions to the
lowest since mid-November in the week ended March 9. bond yields will continue to focus minds this week
before a Federal Reserve meeting at which some analysts expect
policymakers to strike an optimistic tone on the U.S. economy.
While there are some expectations that the Fed might try to
calm bond markets -- yields have risen some 60 bps since the
last Fed meeting -- the consensus view is Fed Chief Jerome
Powell will not make changes to policy settings.
"The Fed is not expected to tinker with its monetary policy
but instead communicate via forecasts that the situation is
under control and that markets are running way ahead of
themselves," SEB analysts said in a note.
U.S. producer prices increased strongly in February, leading
to the largest annual gain in nearly 2-1/2 years, with the
economy set for a massive shot in the arm from President Joe
Biden's $1.9 trillion stimulus package.[ The greenback rose 0.01% against the yen to 109.05
JPY=EBS , drifting to its highest since June 2020.
The euro weakened 0.2% to $1.1925 EUR=EBS after rising
last week for the first time in three weeks as latest data
showed hedge funds slashed their net euro positions.
Defeat in two regional votes on Sunday for Germany's ruling
Christian Democrats (CDU) ahead of federal elections in
September also weighed on sentiment.
The Australian dollar AUD=D3 -- viewed widely as a liquid
proxy for risk appetite -- fell 0.2% to $0.7745, extending
Friday's 0.4% loss.
Bitcoin weakened more than 5% after surging to a record high
of $61,781.83 over the weekend. L1N2LD0LY
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World FX rates https://tmsnrt.rs/2RBWI5E
JPY positions https://tmsnrt.rs/3crNRPE
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