* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Saikat Chatterjee
LONDON, April 14 (Reuters) - The dollar held near a
one-month low on Wednesday as strong demand at a U.S. bond
auction fuelled a widespread drop in Treasury yields, reducing
the interest rate advantage the greenback held over other major
currencies.
In early London trading, the dollar edged 0.1% lower versus
a basket of its rivals =USD to 91.75, its lowest level since
March. 19.
After peaking at a 4-1/2 month high of 93.43 at the end of
March, the greenback has since declined nearly 2% as Treasury
yields eased.
While rate differentials between U.S. and German benchmark
10-year yields DE10US10=RR have narrowed slightly to 193 bps
from more than 200 bps at the start of the month, they remain
considerably higher than 150 bps seen at the start of the year.
The dollar's decline was further fuelled by a pick up in
inflationary pressures which showed U.S. consumer prices rose by
the most in more than 8-1/2 years in March at 2.6%.
Higher inflation failed to translate into expectations of an
acceleration in policy tightening. December 2022 futures
contracts are signalling a slower rise in implied interest
rates, reflecting the Fed's resolve to keep policy on hold.
"The Fed's continued commitment to loose monetary policy
remains a key assumption behind our view that it is still too
premature to expect a sustained US dollar rally at the current
juncture," MUFG strategists said.
The dollar was particularly vulnerable against the yen
JPY=EBS and the euro, with the single currency EUR=EBS
threatening to rise above the psychologically important level of
$1.20 for the first time since early March.
Elsewhere, the New Zealand dollar rose 0.4% to $0.7086
NZD=D4 after the country's central bank held its official
interest rate and asset purchase programme steady, as expected.
The Singapore dollar rose 0.25% to S$1.3376 SGD=D3 after
the Monetary Authority of Singapore (MAS) left its exchange-rate
policy settings unchanged. In cryptocurrencies, bitcoin hit a record high of $64,895
BTC=BTSP ahead of the listing of cryptocurrency platform
Coinbase on Nasdaq later in the day.
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World FX rates https://tmsnrt.rs/2RBWI5E
dollar positions https://tmsnrt.rs/3siohSW
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