February 5, 2018 / 8:52 PM / 8 months ago

FOREX-Dollar rises as U.S. yields fall with stock losses

    * U.S. bond market stabilizes after 10-year yield hits 4-year peak
    * U.S. services sector strongest in over 12 years -ISM
    * ECB's Draghi sees risks from currency market volatility
    * Data show traders build bearish dollar bets in futures market

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, Feb 5 (Reuters) - The dollar rose against a basket of currencies on
Monday as U.S. bond yields rallied on safe-haven demand stemming from a dramatic
selloff on Wall Street, where the Dow Jones at one point fell more than 1,500 points.
    Analysts cautioned, however, that further gains in the greenback would be limited
as other economies seem poised to expand more quickly than the United States.
Speculation that other central banks besides the Federal Reserve may roll back
stimulus will probably cap the U.S. currency's recovery.
    "The dollar selling (had been) overdone," said Paul Christopher, head global
market strategist at Wells Fargo Investment Institute in St. Louis. "We think rates
are not going to go up a lot more here."
    Early on Monday, the U.S. benchmark 10-year Treasury note's yield
touched 2.885 percent, its highest since January 2014, after a robust jobs report
showed wage growth last month posted its biggest annual gain since June 2009. The
monthly payrolls data spurred worries that the Fed might raise U.S. interest rates
faster to counter rising wage pressure.
    The 10-year yield was last at 2.764 percent, down 8.8 basis points from late on
Friday.
    The Institute for Supply Management's gauge on U.S. service industries, which hit
a 12-1/2-year high last month, also supported the dollar on Monday.
    The dollar index was up 0.33 percent at 89.488 after gaining 0.6 percent on
Friday.
    "Could (Monday's performance) change the trend?" Christopher said. "I doubt it."
    Traders are favoring riskier, non-U.S. assets even as U.S. yields remain the
highest among developed markets, which has supported the dollar until recently.
    "Yet the dollar has kept sliding, and sizable positions have built up betting on a
deeper drop," BlackRock's global chief investment strategist Richard Turnill wrote in
a note to clients.
    Data on currency futures positions showed net bearish bets against the dollar
swelled to $17.5 billion last week, just shy of a five-year high.

    The euro fell 0.39 percent to trade at $1.2412, slightly below a three-year
high of $1.2538 on the EBS trading system. 
    The euro briefly pared losses following upbeat comments by European Central Bank
President Mario Draghi before the European Parliament, but Draghi also said the
current surge of the single currency might impair its outlook for price stability.

    Against the yen, the greenback slipped 0.56 percent at 109.48 yen, holding
above a four-month low of 109.76 yen on Jan. 26, Reuters data showed.
    In U.S. afternoon trading, the Dow was down 3.7 percent, while the S&P 500
 index was down 3 percent.
    Currency bid prices at 3:25PM (2025 GMT)
 Description    RIC        Last      U.S.       Pct      YTD Pct  High Bid   Low Bid
                                     Close      Change   Change              
                                     Previous                                
                                     Session                                 
 Euro/Dollar               $1.2414   $1.2460    -0.37    +3.48    +1.2475    +1.2394
 Dollar/Yen                109.4900  110.1000   -0.55    -2.82    +110.2900  +109.1400
 Euro/Yen                  135.94    137.23     -0.94    +0.56    +137.2200  +135.5500
 Dollar/Swiss              0.9345    0.9310     +0.38    -4.09    +0.9376    +0.9288
 Sterling/Doll             1.3998    1.4120     -0.86    +3.60    +1.4150    +1.3988
 ar                                                                          
 Dollar/Canadi             1.2497    1.2424     +0.59    -0.64    +1.2524    +1.2398
 an                                                                          
 Australian/Do  AUD=       0.7908    0.7920     -0.15    +1.37    +0.7953    +0.7891
 llar                                                                        
 Euro/Swiss                1.1604    1.1600     +0.03    -0.73    +1.1639    +1.1573
 Euro/Sterling             0.8866    0.8820     +0.52    -0.19    +0.8871    +0.8812
 NZ                        0.7285    0.7301     -0.22    +2.81    +0.7330    +0.7273
 Dollar/Dolar                                                                
 Dollar/Norway             7.7998    7.7311     +0.89    -4.96    +7.8160    +7.7007
 Euro/Norway               9.6848    9.6324     +0.54    -1.66    +9.6958    +9.6023
 Dollar/Sweden             7.9472    7.9035     +0.22    -3.10    +7.9639    +7.8825
 Euro/Sweden               9.8671    9.8456     +0.22    +0.28    +9.8801    +9.8263
 
    
    

    
 (Additional reporting by Tommy Wilkes in London; Editing by Larry King and Lisa Von
Ahn)
  
 
 
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