FOREX-Dollar extends rebound as U.S. yields rise

* USD extends rebound from near 3-year low
* Bitcoin falls 20% before paring losses

(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, Jan 11 (Reuters) - The dollar edged higher across
the board on Monday, extending a rebound from the near
three-year low hit last week, taking strength from the recent
spike in Treasury yields and the prospect of a growth boost from
higher U.S. fiscal stimulus.
Democratic U.S. President-elect Joe Biden, who takes office
on Jan. 20 with Democrats able to control both houses of
Congress, has promised "trillions" in extra pandemic-relief
spending. Ordinarily, the extra spending plans would prompt investors
to worry about rising inflation and its detrimental effect on
the U.S. dollar in a weak economy, but the currency has been
supported in recent weeks thanks to rising U.S. yields.
U.S. government bond yields have logged big moves in recent
sessions, with the Treasury yield curve experiencing a
significant increase in yields in longer-dated bonds.
Benchmark Treasury yields rose to 10-month highs on Monday
as investors priced for higher government spending under the
incoming Joe Biden administration and before the Treasury will
sell new long-dated supply. At 99 basis points, the spread between the 2-year and
10-year Treasury yield is at its steepest since July 2017.
US2US10=TWEB .
The U.S. dollar index =USD was 0.2% higher at 90.494, its
fourth straight session of gains. The index fell as low as 89.21
last weak, its weakest since March 2018.
"The appreciation of the dollar is coming at a time of not
only rising yields but a risk-off period created by heightened
uncertainty about political developments in the U.S.," said
Paresh Upadhyaya, director of currency strategy and portfolio
manager for Amundi Pioneer Asset Management in Boston
"I think that is exaggerating the strength in the dollar,"
Speculators in the FX market remain extremely bearish on the
dollar, U.S. Commodity Futures Trading Commission data released
on Friday, showed. The stronger dollar took a bite out of the pound GBP= ,
with the British currency down 0.3%, as Britain's chief medical
adviser warned that the next few weeks of the pandemic will be
the worst yet. Meanwhile, bitcoin fell 20% to a one-week low on Monday
before paring losses, putting the cryptocurrency on track for
its biggest one-day drop since March as its recent red-hot rally
faltered. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: US real yields and euro https://tmsnrt.rs/2LbvJA7
GRAPHIC: World FX rates in 2021 https://tmsnrt.rs/2RBWI5E
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