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FOREX-U.S. dollar climbs from nine-week low in step with higher Treasury yields

    * Rise in yields helps dollar recover
    * U.S. Q1 GDP rises; dollar-neutral, but positive for yields
    * Fed's Powell quashes tapering talk, Biden touts spending
    * CAD lifted to three-year high vs U.S. dollar
    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

 (Recasts, adds new comment, ethereum, updates prices)
    By Gertrude Chavez-Dreyfuss and Kate Duguid
    NEW YORK, April 29 (Reuters) - The dollar recovered from a nine-week low on Thursday, lifted by a rise
in U.S. Treasury yields after the government reported strong economic growth for the first quarter and an
improvement in new jobless claims in the latest week.
    U.S. benchmark 10-year Treasury yields rose 2 basis points on Thursday, to 1.639%, boosted
by the upbeat economic reports.
    Gross domestic product increased at a 6.4% annualized rate in the first quarter, the data showed, the
second-fastest growth since the third quarter of 2003. First-quarter growth was powered by consumer
spending, which increased at a 10.7% rate versus a 2.3% pace in the fourth quarter.
    A separate report on Thursday showed U.S. initial claims for state unemployment benefits fell 13,000 to
a seasonally adjusted 553,000 during the week ended April 24.
    "Certainly a big part of the dollar's move is the rise in yields today. There has been a pretty tight
correlation between FX and rates," said Erik Nelson, macro strategist at Wells Fargo Securities in New York.
    "Everyone got complacent with the move lower in rates and the dollar got crushed in April. Now that
yields are coming up and stabilizing  a little bit, we are going to see some dollar strength," he added.
    Strong economic growth typically raises the value of the dollar: higher growth drives more spending,
which in turn boosts prices. As prices rise, the Federal Reserve has historically intervened by raising
interest rates to prevent inflation. 
    In afternoon trading, the dollar index, a gauge of the greenback's value against six currencies, rose
0.1% to 90.596. Earlier, the index hit its lowest level since Feb. 26. The earlier dip in the dollar
also drove the euro to a nine-week high, though the single currency has since stabilized to around
$1.2116, down 0.1%.
    The dollar on Wednesday fell after Fed Chair Jerome Powell dampened speculation about an early tapering
of the U.S. central bank's bond-buying program, saying employment was still far short of target.
 
    The Fed's dovishness was in marked contrast to the Bank of Canada, which has already begun to taper its
asset purchases, sending the U.S. dollar sliding to a three-year trough against the loonie. The
greenback was last down 0.2% against the Canadian currency at C$1.2281.
    The U.S. dollar also struggled overnight after President Joe Biden's push for another $1.8 trillion in
spending risked expanding the U.S. budget and trade deficits, a perennial Achilles heel for the greenback.

    The yen, however, struggled against the dollar, still reeling after the Bank of Japan earlier this week
said inflation will fail to reach its key 2% target through early 2023.
    The dollar was last up 0.3% versus the yen at 108.88 yen.
    In the cryptocurrency market, ethereum, the second largest digital currency in terms of market
capitalization, hit another record high on Thursday of $2,800.89. It was last down 0.7% at
$2,732.09
    Ethereum continues to garner institutional interest, especially with the explosion of decentralized
finance, or DeFi, which are crypto platforms that facilitate lending outside of traditional banking
institutions. These platforms are built on the ethereum blockchain.
    
    ========================================================
    Currency bid prices at 3:15PM (1915 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index                 90.6110        90.5320     +0.10%         0.700%        +90.7900    +90.4220
 Euro/Dollar                  $1.2123        $1.2125     +0.00%         -0.76%        +$1.2150    +$1.2103
 Dollar/Yen                   108.8800       108.6000    +0.26%         +5.38%        +109.2200   +108.4350
 Euro/Yen                     131.99         131.67      +0.24%         +3.99%        +132.3600   +131.6100
 Dollar/Swiss                 0.9087         0.9094      -0.07%         +2.72%        +0.9119     +0.9081
 Sterling/Dollar              $1.3947        $1.3942     +0.05%         +2.09%        +$1.3976    +$1.3932
 Dollar/Canadian              1.2282         1.2312      -0.25%         -3.56%        +1.2321     +1.2279
 Aussie/Dollar                $0.7775        $0.7794     -0.21%         +1.10%        +$0.7818    +$0.7751
 Euro/Swiss                   1.1017         1.1025      -0.07%         +1.94%        +1.1042     +1.1013
 Euro/Sterling                0.8692         0.8697      -0.06%         -2.76%        +0.8702     +0.8675
 NZ                           $0.7246        $0.7263     -0.23%         +0.91%        +$0.7286    +$0.7223
 Dollar/Dollar                                                                                    
 Dollar/Norway                8.1815         8.1930      -0.09%         -4.67%        +8.2305     +8.1545
 Euro/Norway                  9.9207         9.9254      -0.05%         -5.22%        +9.9714     +9.8998
 Dollar/Sweden                8.3662         8.3377      +0.30%         +2.07%        +8.3885     +8.3195
 Euro/Sweden                  10.1426        10.1121     +0.30%         +0.66%        +10.1632    +10.1050
 
    
 (Reporting by Kate Duguid and Gertrude Chavez-Dreyfuss; Editing by Marguerita Choy and Paul Simao)
  
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