FOREX-Dollar firms from 7-week lows as risk appetite fades

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Saikat Chatterjee
LONDON, April 21 (Reuters) - The U.S. dollar firmed on
Wednesday, rising from a seven-week low hit overnight, as
broad-based weakness in stock markets triggered by a resurgence
of COVID-19 cases in countries from India to Japan fuelled
renewed appetite for the greenback.
The safety bid also supported the Swiss franc CHF=EBS and
the Japanese yen JPY=EBS as the outlook for the global economy
soured.
The dollar index =USD , which tracks the U.S. currency
against six major peers, was up 0.14% at 91.347 in early London
trading after slumping as low as 90.856 on Tuesday for the first
time since March 3. It has declined 2.4% so far this month.
The greenback's bounce was also accompanied by softer U.S.
Treasury yields as investors weighed the surge in COVID-19 cases
against a broad-based selloff in the U.S. dollar in recent weeks
despite strong U.S. employment and retail sales data.
Thu Lan Nguyen, a strategist at Commerzbank said more
positive U.S. data could easily kick-start another dollar rally,
particularly if the uneven pace of vaccinations fuels greater
demand for U.S. Treasuries as a hedge against a crisis.
"So for now, U.S. dollar bears should make sure that they
don't get excited too soon," she said in a note.
The benchmark 10-year Treasury yield US10YT=RR was around
1.58%, not far from its lowest since mid-March, as it continued
to consolidate following its retreat from the 14-month high at
1.7760% reached at the end of last month.
The euro EUR=EBS was down 0.25% at $1.2000, after touching
a seven-week high of $1.2079 overnight.
The European Central Bank decides policy on Thursday, with
the Federal Reserve following next week.
Declines in U.S. yields and the dollar in April have come as
evidence mounted that the Fed would be slower in tightening
monetary policy than it had appeared to the market.
Broadly, pandemic developments triggered investor caution.
India reported 1,761 deaths from COVID-19, its highest daily
toll, while Canada and the United States extended a land-border
closure for non-essential travellers
The Australian dollar, a barometer for risk appetite, nursed
losses at $0.7717 after weakening 0.4% overnight.
In cryptocurrencies, bitcoin BTC=BTSP traded around
$55,000, consolidating following its dip to as low as $51,541.16
on Sunday. It set a record high at $64,895.22 on April 14.

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