* Dollar/yen jumps to 3-wk peak after U.S. 10-yr yield rises
* USD inches ahead on other majors
* Kiwi dips after RBNZ extends QE, talks of negative rates
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook and Eimi Yamamitsu
SINGAPORE/TOKYO, Aug 12 (Reuters) - The dollar inched ahead
on Wednesday, as a jump in U.S. yields pushed it higher against
the Japanese yen, while the kiwi briefly hit a one-month low
after the central bank extended its bond buying programme.
The yield on 10-year U.S. debt US10YT=RR , which rises when
bond prices fall, made its steepest gain in two months on
Tuesday ahead of the largest ever 10-year auction later on
Wednesday. US/
That triggered a wave of gold selling, which deepened in
Asia, and it has pressured the yen as better returns on U.S.
debt lures investment from zero-yielding Japan.
The yen JPY= fell 0.24% to 106.76 per dollar, its lowest
since July 24. The tumbling gold price XAU= , which has dropped
roughly 7% in two days, also dragged on the Australian dollar
since Australia is the world's second biggest gold producer.
The Aussie AUD=D3 fell 0.35% to $0.7120 while the New
Zealand dollar NZD=D3 fell 0.5% to $0.6547. AUD/
Elsewhere in financial markets, the focus was on the
political holdup in Washington over a new stimulus package,
which capped broader investor sentiment.
The jump in yields was driven by both repositioning ahead of
big debt issuance this week and a sense that the global recovery
is looking broader and more robust - a mood helped somewhat by
Russia hailing the approval of a COVID-19 vaccine. "Investors have been positioning themselves to buy back
dollars they had sold against the yen," said Mitsuo Imaizumi,
chief FX strategist at Daiwa Securities, adding that a short
squeeze was seen as the U.S. yields spiked.
Against a basket of currencies =USD , the dollar extended a
bounce made last Friday as U.S.-China tensions ratcheted higher
with President Donald Trump's ban on TikTok and WeChat.
It last sat at 93.846. Against the euro EUR=EBS the
greenback was a tad firmer at $1.1718 and against the pound
GBP= it extended Tuesday gains that followed a weak British
jobs report to hit $1.3021 per pound.
The dollar index has slumped 9% from a three-year high it
hit in March and lost 4% in July alone, leaving investors
divided over whether the support the greenback has found in
August amounts to a bounce or a pause in its decline.
DOVISH KIWI
In New Zealand the central bank kept rates on hold, as
expected.
But it surprised markets a little by extending the duration
of its bond buying program, flagging an increase in purchases
next week, and putting a little more emphasis on the possibility
of negative rates in the future. "Taken together, that's why interest rates have fallen a few
basis points and why the kiwi fell," said Westpac FX analyst
Imre Speizer. "That's a modest dovish reaction."
Ten-year New Zealand government debt was last down about 5
basis points, reflecting a small drop across the curve, and the
kiwi recovered slightly from a one-month low $0.6524.
On the horizon are U.S. inflation figures due at 1230 GMT,
which are expected to show consumer price growth drift down to
1.1% on a year-on-year basis from 1.2% in June.
Investors are also looking for signs that the political
impasse in Washington over the next stimulus programme can be
overcome, with the stalemate weighing on U.S. equities as
Democrats and Republicans blamed each other for the deadlock.