* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Saikat Chatterjee
LONDON, April 6 (Reuters) - The U.S. dollar rebounded from
a near two-week low on Tuesday as short-term optimism about the
outlook for the U.S. economy prompted investors to consolidate
positions after a selloff overnight.
April has got off to a weak start for the dollar as hedge
funds cut their long positions on the currency, despite an
encouraging U.S. jobs report on Friday and a solid U.S. services
activity reading on Monday.
The dollar index =USD sank as low as 92.527 in Asia, its
weakest since March 25 before trimming some overnight losses.
The U-turn comes less than a week after it hit an almost
five-month top at 93.439.
But overall sentiment turned positive for the dollar in
quiet London trading as bond yields stabilised and European
stocks hit a record high.
The dollar index =USD advanced 0.14% to 92.70. On Monday,
it fell 0.43%, its biggest single-day drop since March. 17,
according to Refinitiv data.
"It is difficult to be pessimistic on the dollar as the U.S.
economy is already stronger than Europe's thanks to fewer
lockdowns, is miles ahead in the vaccination race, and has more
stimulus coming," said Marios Hadjikyriacos, an investment
analyst at brokerage XM.
The dollar has risen this year, along with Treasury yields,
as investors bet the United States would recover faster from the
pandemic than other developed nations, amid massive stimulus
and aggressive vaccinations. At 2.5%, March's was the biggest
monthly gain for the dollar since the end of 2016.
However, some analysts expect further dollar gains to be
difficult. More evidence is needed that the U.S. reflationary
advantage versus other major economies is gaining strength.
Benchmark 10-year Treasury yields US10YT=RR extended their
retreat on Tuesday, dipping below 1.7% early in early London
trading from a peak of 1.776% last week - a level not seen since
January of last year.
"The USD level has now outstripped the pickup in non-U.S.
growth expectations," meaning "there's room for a USD pause" in
its recent uptrend, Mark McCormick, the global head of
foreign-exchange strategy at TD Securities, wrote in a client
note.
The pause in the dollar's drop also undercut the euro's
advances. It struggled to hold above $1.18, with pandemic-linked
activity casting a shadow over the near-term economic outlook.
Elsewhere, the Australian dollar AUD=D3 , considered a
proxy for risk appetite, slipped to $0.76415 on Tuesday, after
rallying 0.8% to start the week. The Reserve Bank of Australia
left policy unchanged on Tuesday, as expected. Major cryptocurrency Etheruem ETH=BTSP reached a peak of
$2,151.63 on Tuesday, helping the cryptocurrency market
capitalization to reach a record $2 trillion on Monday,
according to data and market trackers CoinGecko and Blockfolio.
Ethereum, which like most smaller cryptocurrencies tends to
move in tandem with bitcoin, has soared around three times this
year. Bitcoin has roughly doubled BTC=BTSP . <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
EUR positions https://tmsnrt.rs/2Rd7nsf
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