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FOREX-Dollar holds nerve before Powell, Aussie and kiwi rise again
Published at 04/03/2021 at 05:54

* Graphic: World FX rates

* Treasury market regains calm, yields support dollar

* Safe-harbour yen and Swiss franc fall against greenback

* Powell comments could set the tone for global markets

By Stanley White

TOKYO, March 4 (Reuters) - The dollar hit a seven-month high against the yen on Thursday as a more orderly rise in U.S. Treasury yields lent support ahead of a speech by Federal Reserve Chairman Jerome Powell that may determine the trend for global bond markets and currencies.

The dollar also traded near a three-month high against the Swiss franc and held on to gains against most currencies as a renewed sense of calm in the Treasury market underpinned sentiment.

However, the greenback lost ground against its Australian and New Zealand counterparts as traders who expect stronger global growth continued to stock up on commodity currencies.

Investors are anxious to see if Powell expresses concern about a recent volatile sell-off in Treasuries and if there is any change in his assessment of the economy before the Fed's next meeting ending March 17.

The dollar may extend gains versus the yen as long as Treasury yields rise at a measured pace, but the greenback is likely to fall against currencies of major commodities exporters as more signs point to a rebound in global growth.

"The performance of the dollar will vary depending on the currency," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

"Dollar/yen looks well bid because of yields and because Japan's economy is underperforming relative to the United States, but as long as commodity prices rise, the dollar will weaken against commodity currencies."

The dollar rose to 107.09 yen , the highest since July last year.

The U.S. currency bought 0.9191 Swiss franc , close to the highest since November.

The British pound steadied at $1.3955, while the euro traded at $1.2057, nursing a 0.24% loss from the previous session.

The benchmark 10-year Treasury yield edged up to 1.4757%.

A chaotic sell-off in Treasuries from the start of the year on concerns that massive government spending to support the global economy may drive up inflation culminated in 10-year yields rising to a one-year high of 1.6140% last week.

The move was so rapid that global stock markets tumbled and the dollar swooned against most currencies, but the greenback has since regained its composure as disorderly selling of Treasuries ebbed, for now at least.

The dollar index stood at 91.005 against a basket of six major currencies, holding on to a 0.32% gain from Wednesday.

The Australian dollar , which is often traded as a proxy for global growth because it is closely tied to commodities, recovered from early losses and rose to $0.7799.

The New Zealand dollar , another closely watched commodity currency, also firmed slightly.

Traders said the Aussie and the kiwi are likely to continue rising because both economies are rebounding strongly from the COVID-19 pandemic and they will both benefit from an acceleration in global trade.

In the cryptocurrency market, bitcoin fell 1.49% to $49,647, while rival digital currency ether fell 0.65% to $1,557.

Bitcoin has surged 78% so far this year as it gains more acceptance in the financial services industry, but the U.S. financial regulator is likely to start working on guidelines for digital assets, which could increase scrutiny of cryptocurrencies.

========================================================

Currency bid prices at 0532 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.2057 $1.2062 -0.04% -1.32% +1.2065 +1.2044

Dollar/Yen 107.0450 106.9600 +0.11% +3.67% +107.1050 +106.9900

Euro/Yen 129.06 129.08 -0.02% +1.69% +129.1300 +128.9200

Dollar/Swiss 0.9191 0.9200 -0.10% +3.89% +0.9200 +0.9190

Sterling/Dollar 1.3955 1.3950 +0.01% +2.12% +1.3956 +1.3920

Dollar/Canadian 1.2648 1.2656 -0.02% -0.63% +1.2674 +1.2652

Aussie/Dollar 0.7799 0.7775 +0.30% +1.37% +0.7800 +0.7753

NZ 0.7257 0.7246 +0.14% +1.04% +0.7258 +0.7227

Dollar/Dollar

All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Reporting by Stanley White; Editing by Richard Pullin, Ana Nicolaci da Costa & Shri Navaratnam)

((stanley.white@tr.com; +81 (0)3 4563 2799; twitter.com/stanleywhite1 ;))