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FOREX-Dollar slumps as U.S. Treasury yields soften, but bitcoin eyes $50,000

    * Dollar index falls to one-week low
    * U.S. stimulus ignites deficit concerns, analyst says
    * Yen, euro, sterling strengthen against dollar
    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

 (Adds new comments, FX table, bullets, updates prices, changes
byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Feb 9 (Reuters) - The dollar fell to a one-week
low on Tuesday, as a slide in U.S. Treasury yields raised doubts
about the outlook for the greenback against the backdrop of a
looming U.S. fiscal stimulus package.
    But Bitcoin soared to a new record high, on its
way toward another key milestone: $50,000. It has surged more
than 1,000% since March 2020 at the beginning of pandemic and
analysts said forecasts of bitcoin hitting $100,000 this year
doesn't seem far-fetched after all.
    Market participants pushed up the dollar recently as
Democrats moved to fast-track President Joe Biden's $1.9
trillion COVID-19 relief package. But some analysts say massive
fiscal spending and continued ultra-easy Federal Reserve
monetary policy will ultimately prove to be a dollar headwind.
    "Investors may be registering concerns that the fiscal
stimulus will boost the U.S. current account deficit and we
concur that structural imbalances remain a weakness in the
longer run outlook for the U.S. dollar, especially amid reduced
U.S. growth and yield differentials," said Shaun Osborne, chief
foreign exchange strategist, at Scotiabank in Toronto.
     U.S. benchmark 10-year U.S. Treasury yields
rose to near March 2020 highs on Monday as investors bet on a
broader reflationary theme in the financial markets. But it
slipped back to 1.14%, down 5 basis points from Monday's
session.
    The dollar index was 0.4% lower at 90.58, after
earlier hitting a one-week low.
    Disappointing U.S. jobs data on Friday knocked the wind out
of a two-week run that had lifted the dollar to a more
than two-month high of 91.60.
    Osborne said dollar losses at this point were a little
premature, "especially as positioning indicators suggest that
active traders continue to reduce what remains a fairly
significant U.S. dollar short exposure."
    Tuesday raised familiar doubts among investors, with some
traders saying fresh fiscal stimulus along with record low U.S.
interest rates will weigh on the currency in the coming months.
    "The reflation trade that boosted equities and caused the
30-year yield breach 2% has changed to worries that a quick
spike in inflation would be detrimental to risk and also the
dollar," said John Doyle, vice president of dealing and trading,
at Tempus Inc. in Washington.
    
    BLISTERING BITCOIN
    The biggest beneficiary of the weakening dollar was
cryptocurrencies with bitcoin rocketing above
$48,000, building on a nearly 20% surge overnight after Tesla
Inc announced a $1.5 billion investment in the digital
asset.   
    The yen was another major beneficiary, with the
Japanese unit rising 0.6% against the U.S. dollar to 104.69 yen.
    The yen has become increasingly correlated with outright
yields rather than an indicator of broad risk sentiment. A
90-day rolling correlation between yen and U.S. yields has
strengthened considerably since the final quarter of 2020.
    Elsewhere, the euro rose 0.4% to $1.2096 on
Tuesday, up from a two-month low of $1.1952 touched Friday.
    The British pound revisited its highs since May
2018. It last traded up 0.4% at $1.3787.  
    
    ========================================================
    Currency bid prices at 10:18AM (1518 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index                 90.5860        90.9530     -0.39%         0.672%        +90.9630    +90.5020
 Euro/Dollar                  $1.2096        $1.2050     +0.39%         -0.99%        +$1.2117    +$1.2049
 Dollar/Yen                   104.5300       105.2100    -0.48%         +1.37%        +105.2550   +104.5500
 Euro/Yen                     126.43         126.78      -0.28%         -0.39%        +126.8400   +126.4500
 Dollar/Swiss                 0.8938         0.8989      -0.56%         +1.03%        +0.8990     +0.8930
 Sterling/Dollar              $1.3792        $1.3742     +0.33%         +0.92%        +$1.3794    +$1.3739
 Dollar/Canadian              1.2734         1.2740      -0.05%         +0.00%        +1.2766     +1.2714
 Aussie/Dollar                $0.7714        $0.7704     +0.16%         +0.31%        +$0.7736    +$0.7701
 Euro/Swiss                   1.0812         1.0829      -0.16%         +0.05%        +1.0833     +1.0809
 Euro/Sterling                0.8769         0.8769      +0.00%         -1.89%        +0.8798     +0.8763
 NZ                           $0.7225        $0.7220     +0.14%         +0.68%        +$0.7254    +$0.7216
 Dollar/Dollar                                                                                    
 Dollar/Norway                8.4775         8.5205      -0.53%         -1.30%        +8.5000     +8.4610
 Euro/Norway                  10.2551        10.2550     +0.00%         -2.02%        +10.2725    +10.2320
 Dollar/Sweden                8.3381         8.3870      -0.12%         +1.73%        +8.3962     +8.3317
 Euro/Sweden                  10.0863        10.0983     -0.12%         +0.10%        +10.1255    +10.0780
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London; Editing by Edmund Blair)
  
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