GLOBAL MARKETS-Yen near 7-month low, Asian shares fall as bond yields rise

NEW YORK, March 3 (Reuters) - The Japanese yen hit a
seven-month low on the dollar on Thursday as hopes that vaccine
distribution and more government stimulus will drive the U.S.
economy into a solid rebound lifted the greenback and benchmark
Treasury yields.
But the creep up in benchmark yields may weigh on Asian
stocks, as wary investors recall last week's sell-off in
government bonds that caused yields to spike, spooking equity
markets and causing shares to tumble.
By early Thursday, Australian shares .AXJO had lost 1% and
E-mini S&P futures ESc1 slipped 0.25%.
U.S. shares had fallen overnight as investors sold off
high-flying technology shares to focus on other sectors likely
to benefit from an economic recovery. .N
Investor focus on an economic rebound was not detracted by
data released overnight that showed the U.S. labour market
struggling in February, when private payrolls rose less than
expected. Instead, currency investors continued to snap up dollars as
they bet on a U.S. economy outshining its peers in the developed
world in coming months. USD/
A firmer dollar pushed the Japanese yen JPY=D3 to a low of
107.06 yen, a level not seen since July. By early Thursday, the
Japanese yen stood at 107.06 yen.
Optimism over the U.S. economy boosted the greenback against
a basket of currencies, with the dollar index USD= up 0.28% at
91.062.
"U.S. dollar/yen has been on a one-way trajectory since the
start of 2021," said Joseph Capurso, head of international
economics at the Commonwealth Bank of Australia. "The
brightening outlook for the world economy is a positive for both
U.S. dollar/yen and Australian dollar/yen."
Against the Australian dollar AUD= , the yen traded at
83.09 yen AUDJPY= .
In a sign of investors' bullish bets on the U.S. economy,
the U.S. yield curve steepened overnight. The gap between yields
on two- and 10-year Treasury notes widened to as much as 135.4
basis points on Wednesday, the most since Feb. 26, when the
curve had steepened by the most since 2015. US/
In early Thursday trade, the 10-year Treasury yield crept
higher to 1.482%, though off the one-year high of 1.614% struck
last week.
All eyes will be on Federal Reserve Chairman Jerome Powell,
who is set to speak on Thursday at 1705 GMT. Investors will be
watching his remarks for signs the central bank is poised to
concede the risk of a rapid rise in interest rates.
A stronger dollar weighed on gold, with the price of bullion
XAU= edging down to $1,709.7471 an ounce. GOL/
Oil prices softened early Thursday, after jumping more than
2% overnight, boosted by a huge drop in U.S. fuel inventories
and expectations that OPEC+ producers might decide against
increasing output when they meet next week. O/R
U.S. crude CLc1 fell 0.47% to $60.99 per barrel.

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