FOREX-Dollar gains on higher yields, safe haven bid, risky currencies weaken


 (New throughout, updates prices, changes byline, dateline;
previous LONDON)
    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

    By Karen Brettell
    NEW YORK, Feb 26 (Reuters) - The U.S. dollar rose against
most major currencies on Friday as U.S. government bond yields
held near one-year highs, while riskier currencies such as the
Aussie dollar weakened.
    Yields have surged as an acceleration in the pace of
vaccinations globally and optimism over improving global growth
bolster bets that inflation will rise. That has also led
investors to price in earlier monetary tightening than the
Federal Reserve and other central banks have signaled.

    The dollar move is "a function of what's happening on the
yields side," said Jeremy Stretch, head of G10 FX strategy at
CIBC World Markets. The 10-year yield briefly climbed above the
S&P 500 dividend yield on Thursday, he noted, indicating
"uncertainty that is writ large."
    The dollar index rose 0.18% to 90.479, after earlier
reaching 90.773, its highest level in a week.
    It gained against the yen, touching 106.51 for the
first time since September.
    The benchmark 10-year Treasury yield surged
above 1.6% on Thursday for the first time in a year after a weak
seven-year note auction. It was last at 1.47%.
    U.S. yield increases have accelerated this month as Fed
officials refrain from expressing concern about the yield gains.

    “The Fed has not really hinted that that’s making them
uncomfortable, so the bond market’s going to push that,” said
Edward Moya, senior market analyst at OANDA in New York. “That’s
really dictating this move in the dollar… you're seeing risk off
across the board.”
    Riskier currencies retreated. The Aussie fell 1.23%
to $0.7772, after topping $0.80 on Thursday for the first time
since February of 2018.
    Marshall Gittler, head of research at BDSwiss, said the
Australian dollar was underperforming despite the market
signaling higher growth, likely because the country's central
bank's yield curve control policy would restrain its bond yields
from moving much higher. That, in turn, could limit the
attractiveness of the currency.
    The greenback is likely to continue to benefit from safe-
haven flows if risk appetite continues to worsen, and emerging
market currencies may be among the biggest losers.
    “There’s a big, big concern that this reflation risk is
going to get out of hand and that’s going to really pummel the
emerging market currencies, and I think you’re going to see that
investors are going to need to reassess their dollar positions,”
said Moya.
    Data on Friday showed U.S. consumer spending increased by
the most in seven months in January, while price pressures were
muted.
    The euro dipped 0.32% to $1.2135 after touching a
seven-week high of $1.2244 on Thursday.
    Bitcoin was last up 0.24% at $47,155. Ethereum
 gained 2.8% to $1,522.
    
   ========================================================
    Currency bid prices at 9:55AM (1455 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index                 90.4790        90.3270     +0.18%         0.553%        +90.7730    +90.1250
 Euro/Dollar                  $1.2135        $1.2175     -0.32%         -0.67%        +$1.2185    +$1.2093
 Dollar/Yen                   106.4150       106.2100    +0.20%         +3.03%        +106.5150   +105.9000
 Euro/Yen                     129.15         129.35      -0.15%         +1.76%        +129.5300   +128.6600
 Dollar/Swiss                 0.9049         0.9051      -0.02%         +2.28%        +0.9068     +0.9027
 Sterling/Dollar              $1.3955        $1.4009     -0.37%         +2.16%        +$1.4025    +$1.3890
 Dollar/Canadian              1.2647         1.2605      +0.32%         -0.70%        +1.2684     +1.2588
 Aussie/Dollar                $0.7772        $0.7870     -1.23%         +1.05%        +$0.7883    +$0.7731
 Euro/Swiss                   1.0981         1.1016      -0.32%         +1.61%        +1.1026     +1.0957
 Euro/Sterling                0.8694         0.8688      +0.07%         -2.72%        +0.8730     +0.8673
 NZ                           $0.7293        $0.7370     -1.02%         +1.59%        +$0.7381    +$0.7255
 Dollar/Dollar                                                                                    
 Dollar/Norway                8.5495         8.5010      +0.60%         -0.41%        +8.6255     +8.5025
 Euro/Norway                  10.3735        10.3450     +0.28%         -0.89%        +10.4380    +10.3170
 Dollar/Sweden                8.3514         8.2950      +0.42%         +1.88%        +8.3844     +8.2815
 Euro/Sweden                  10.1348        10.0922     +0.42%         +0.58%        +10.1540    +10.0878
 


    
 (Additional reporting by Ritvik Carvalho in London; Editing by
Dan Grebler)
  

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