FOREX-Dollar holds before Powell speaks, Swiss franc falls to five-month low

* Powell comments awaited
* Swiss franc, yen hit multi-month lows
* Aussie, Kiwi pare gains
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, March 4, (Reuters) - The dollar held gains against a
basket of its peers on Thursday as a more orderly rise in U.S.
Treasury yields lent support before a speech by Federal Reserve
Chairman Jerome Powell that may determine the trend for global
bond markets and currencies.
The dollar also hit a five-month high against the Swiss
franc and a seven-month high to the Japanese yen while holding
on to gains against most currencies as a renewed sense of calm
in the Treasury market underpinned sentiment.
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 it is likely to
fall against currencies of major commodities exporters as more
signs point to a rebound in global growth.
"Comments that he (Powell) is monitoring events in the
Treasury market might be enough to calm things down, encourage a
return to high-yield FX and a softer dollar, but no such concern
would suggest the Fed is happy for US Treasury yields to ‘find
the right level' – as our bond strategy colleagues say –
potentially triggering another spike in U.S. yields and more
dollar short-covering," ING said in a note to clients.
The dollar rose to 107.36 yen JPY=D3 , its highest since
July last year.
The U.S. currency bought 0.92540 Swiss franc CHF=EBS , its
highest against the safe-haven currency since September 28.
"We would caution against chasing CHF (franc) weakness
against the USD (dollar) and EUR (euro) at current levels and
see potential for a short squeeze," said Dan Tobon, strategist
at CitiFX.
"Current levels on EURCHF are attractive for tactical
shorts, though an acceleration higher in U.S. yields remains a
risk."
The British pound GBP=D3 steadied at $1.3942, while the
euro EUR=D3 traded at $1.2043, down 0.15% on the day.
The benchmark 10-year Treasury yield US10YT=RR backed down
to 1.4533%, after rising earlier to 1.4567%.
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 dropped against most currencies, but it has since
regained its composure as disorderly selling of Treasuries
ebbed, for now at least.
The dollar index USD= stood at 91.158 against a basket of
six major currencies, holding on to a 0.32% gain from Wednesday.
The Australian dollar AUD=D3 , which is often traded as a
proxy for global growth because it is closely tied to
commodities, recovered from early losses and rose to $0.7776, up
0.1% on the day.
The New Zealand dollar NZD=D3 , another closely watched
commodity currency, weakened 0.1% to $0.7239.
Traders said the Aussie and the kiwi are likely to continue
rising because both economies are rebounding from the COVID-19
pandemic and they will both benefit from an acceleration in
global trade.
In the cryptocurrency market, bitcoin BTC=BTSP fell 1.8%
to $49,414. Rival digital currency ether ETH=BTSP fell 0.4% to
$1,561.
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.

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