FOREX-Dollar pinned near one-month low, Bitcoin steadies near $57k after weekend drop

* Dollar hovers above 1-month low
* Analyst says carry trade may thrive in low vol environment
* Bitcoin trades near $57,000 after weekend plunge
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, April 19 (Reuters) - The dollar traded just above a
one-month low against major peers on Monday, with Treasury
yields near their lowest in five weeks, after the U.S. Federal
Reserve reiterated its view that any spike in inflation was
likely to be temporary.
The dollar was also held down by improved risk sentiment
amid a rally in global stocks to record highs.
Bitcoin BTC=BTSP stabilized after losses from Sunday, when
it plunged as much as 14% to $51,541, which a report attributed
to news of a power outage in China.
The dollar index =USD , which tracks it against six other
currencies, was at 91.552, not far from last week's low of
91.484, a level not seen since March 18.
The dollar bought 108.40 yen JPY=EBS , its lowest against
the Japanese currency since March 24.
"Following the decline since end-March, the dollar index has
stabilized since mid-last week," said Jussi Hiljanen, chief
strategist, USD and EUR rates at SEB.
"The dollar is likely to remain counter cyclical until the
dollar rates in the 2-5y sector take another leg higher. As we
expect the dollar rates to move more or less sideways during Q2,
EUR/USD has room to gain in the coming months, especially if
vaccination speeds up in the euro area and the earnings season
pushes the stock market even higher."
The euro changed hands at $1.1985 EUR=EBS , flat on the day
and near its highest against the dollar since March 4. The
European Central Bank meets on Thursday with internal divisions
over the pace of bond buying, extended COVID-19 lockdowns and
potential delays to the EU recovery fund form the backdrop.
The 10-year Treasury yield sank as low as 1.5280% last week
from 1.7760% at the end of last month, its highest in more than
a year.
The S&P 500 .SPX closed at a record high on Friday,
extending a rally in global stocks.
Fed Governor Christopher Waller said on CNBC on Friday that
the U.S. economy "is ready to rip" as vaccinations continue and
activity picks up, but a rise in inflation is likely to be
transitory, echoing comments from other Fed officials, including
Chair Jerome Powell, over the past week. "With liquidity still abundant, we are going to hear more
about the FX carry trade – which thrives in a low volatility
environment," said Chris Turner, global head of markets and
regional head of research for UK and CEE at ING.
"This especially being the case if the Fed manages to make
the April 28th meeting a non-event. With the SOFR overnight USD
interest rate now at 0.01%, the dollar clearly doesn't score
highly on the carry front. And indeed a little more confidence
in the European and global recovery stories may well see flows
start to resume to EM – having been derailed by the Treasury
sell-off in February and March."
MSCI's emerging market currency index traded 0.1% higher on
the day, and is up 0.8% from the start of last week.
.MIEM00000CUS
Bitcoin stabilized around $57,471 after a weekend plunge.
Data website CoinMarketCap cited a blackout in China's
Xinjiang region, which reportedly powers a lot of bitcoin
mining, for the selloff. Analysts at National Australia Bank cited "speculation in
several online reports" that the U.S. Treasury may crack down on
money laundering within digital currencies for the sharp move
lower.
The bitcoin rout also followed a decision on Friday by
Turkey's central bank to ban the use of cryptocurrencies for
purchases. Despite recent weakness, the world's most popular
cryptocurrency remains up 97% in 2021, after more than
quadrupling last year.
"We suspect the 15% weekend correction in Bitcoin will not
have broader market ramifications," ING's Turner said.

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