(Updates with impact of announcement by central bank of Canada)
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By David Henry
NEW YORK, April 21 (Reuters) - A U.S. dollar rebound against major currencies was interrupted on
Wednesday after Canada's central bank signaled an interest rate hike in 2022 and reduced the scope of its
asset-buying program.
The dollar index =USD , which tracks the U.S. currency against six major peers, turned down after the
announcement from the Bank of Canada and was off by 0.1% at noon (1600 GMT) in New York after having been up
as much as 0.24% for the day. The greenback lost about 1% against the Canadian dollar.
Earlier the U.S. dollar had rebounded from a seven-week low hit overnight against major currencies as
broad weakness in stock markets triggered by a resurgence of COVID-19 cases in India and Japan encouraged a
retreat to the safe-haven appeal of the greenback.
The safety bid had also supported the Swiss franc CHF=EBS and the Japanese yen JPY=EBS as the bright
outlook for a global recovery dimmed.
But the catalyst for the move between the two North American dollars on Wednesday was a reminder that
the outlook for changes in interest rates have been key to currencies as recoveries unfold. The greenback
weakened through much of April as U.S. interest rates declined and as traders bet that vaccinations would
open up a stronger global economic recovery and drive demand for riskier and higher-yielding currencies.
The greenback's bounce had come with softer U.S. Treasury yields as investors reconsidered how long it
might take before inflation forces the Federal Reserve to tighten monetary policy and as they saw prices for
oil and stocks hit on Tuesday by the prospect of a slower global recovery because of more COVID-19 cases.
The Fed's Open Market Committee meets next week and the European Central Bank decides policy on
Thursday. Though neither is expected to signal a change in policy now, traders may hold back from big bets
for a few days, said Joseph Manimbo, senior market analyst at Western Union Business Solutions.
"I think the market is just going to play it carefully in case the Fed changes its tune," Manimbo said.
At the moment, he sees the market acting as though it is at "somewhat of a crossroads for the dollar
given that it has struggled this month."
Some analysts have said that a new inclination by the Bank of Canada to tighten monetary policy could
prove to foreshadow changes by other central banks.
The Bank of Canada sharply raised its outlook for the economy and reduced the scope of its large-scale
asset-buying program while keeping its key interest rate steady. It said the pandemic will be "less
detrimental" to the economy than it had thought. The benchmark 10-year Treasury yield US10YT=RR climbed to 1.58% on the news from Canada and then
hovered just above 1.57%, not far from the 1.60% level at the start of the week, as the note consolidated
gains after a reversal that had driven yields to a 14-month high at 1.7760% last month.
The biggest casualty of the dollar's rise in Wednesday trading was the euro, with the single currency
EUR=EBS weakening as much as 0.24%. It was last flat at $1.2029 after touching a seven-week high of
$1.2079 overnight.
The Japanese yen, JPY=EBS often seen as a safer refuge than the dollar, gained against the greenback
to 107.86 but then drifted back to 108.14 on Wednesday morning.
India reported its highest daily toll of 1,761 deaths from COVID-19, while Canada and the United States
extended a land-border closure for nonessential travelers.
In cryptocurrencies, bitcoin BTC=BTSP traded around $56,000, consolidating after 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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Currency bid prices at 12:24PM (1624 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 91.1460 91.2210 -0.07% 1.295% +91.4300 +91.0860
Euro/Dollar EUR=EBS $1.2029 $1.2036 -0.06% -1.55% +$1.2044 +$1.1999
Dollar/Yen JPY=EBS 108.1400 108.0950 +0.05% +4.67% +108.2800 +107.8800
Euro/Yen EURJPY= 130.06 130.08 -0.02% +2.47% +130.1400 +129.6500
Dollar/Swiss CHF=EBS 0.9167 0.9159 +0.09% +3.62% +0.9195 +0.9154
Sterling/Dollar GBP=D3 $1.3931 $1.3938 -0.03% +1.99% +$1.3949 +$1.3886
Dollar/Canadian CAD=D3 1.2493 1.2612 -0.94% -1.89% +1.2652 +1.2459
Aussie/Dollar AUD=D3 $0.7752 $0.7725 +0.36% +0.78% +$0.7762 +$0.7699
Euro/Swiss EURCHF= 1.1026 1.1019 +0.06% +2.03% +1.1042 +1.1009
Euro/Sterling EURGBP= 0.8632 0.8631 +0.01% -3.41% +0.8644 +0.8614
NZ NZD=D3 $0.7208 $0.7170 +0.56% +0.40% +$0.7218 +$0.7163
Dollar/Dollar
Dollar/Norway NOK=D3 8.3410 8.3650 -0.34% -2.92% +8.3920 +8.3360
Euro/Norway EURNOK= 10.0340 10.0630 -0.29% -4.14% +10.0899 +10.0226
Dollar/Sweden SEK= 8.4136 8.4325 -0.28% +2.65% +8.4780 +8.4127
Euro/Sweden EURSEK= 10.1205 10.1490 -0.28% +0.44% +10.1751 +10.1212
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World FX rates https://tmsnrt.rs/2RBWI5E
EURUSD and CESI https://tmsnrt.rs/3dCbGpV
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