April 20, 2018 / 2:50 PM / in 6 months

FOREX-Dollar rises with U.S. yields, sterling weakens

    * U.S. 2-year yield touches highest since Sept 2008
    * Euro hits 2-week lows amid worries about euro zone growth
    * Sterling on track for steepest weekly drop in 10 weeks
    * Commodity sensitive currencies broadly lower

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, April 20 (Reuters) - The U.S. dollar rose to a
two-week high against a basket of currencies on Friday on rising
U.S. yields, while sterling fell in the wake of disappointing
economic data and dovish comments from the head of the Bank of
England. 
    The euro fell below $1.23 and is poised for its biggest
weekly drop in two months as investors trimmed record high bets
before a European Central Bank meeting next week where
policymakers are largely expected to signal no change in policy.
    Commodity-linked currencies came under pressure thanks to a
drop in Chinese stocks, with the Australian and New Zealand
dollars hitting their lowest in at least two
weeks.
    "Higher U.S. yields have contributed to the rise in the
dollar," said Chuck Tomes, senior investment analyst at Manulife
Asset Management.
    U.S. two-year Treasury yields reached 2.453
percent on Friday, its highest since September 2008, on hawkish
comments from some Federal Reserve officials this week.
Longer-dated yields climbed as rising commodity prices bolstered
bets on higher U.S. inflation.  
    Meanwhile, this week's disappointing economic data out of
Canada, Britain and Europe reduced traders' long bets on those
countries' currencies and renewed the appeal of the greenback,
Tomes said.
    The dollar's overall prospect remains cloudy due to
expectations of United States' growing trade and budget
deficits. 
    "Long-term in 12 to 18 months, the dollar will continue to
move in a weaker fashion," Tomes said.
    At 10:04 a.m. (1404 GMT), an index that tracks the greenback
versus a basket of six currencies rose 0.5 percent, to
90.39 after touching a near two-week high.
    The euro hit $1.2264, the lowest in about two weeks.
It was down 0.61 percent, at $1.2269, putting it on track for it
steeply weekly drop in two months.
    Long euro bets are the biggest consensus trade in the
foreign exchange market, with net positions holding near a
record high despite PMIs recording a sizeable drop in March and
mixed inflation data.    
    The European Central Bank meets next week and expectations
have grown that policymakers may take another small step in
exiting its ultra-easy monetary policy after dropping a
long-standing pledge to increase its bond buying if needed at
its last meeting in March.
    Sterling shed 0.4 percent to $1.4030, leading to a
weekly loss of 1.4 percent which would be its biggest in 10
weeks. 
    Sterling has fallen on weaker-than-expected inflation and
retail sales data and comments from Bank of England Governor
Mark Carney on Thursday, which traders interpreted as BOE being
less committed to raising rates in May due to recent "mixed"
data.    
========================================================
    Currency bid prices at 10:23AM (1423 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2273        $1.2344     -0.58%         +2.31%      +1.2352     +1.2266
 Dollar/Yen       JPY=        107.7500       107.3600    +0.36%         -4.37%      +107.7900   +107.3600
 Euro/Yen         EURJPY=     132.24         132.53      -0.22%         -2.17%      +132.9600   +132.1900
 Dollar/Swiss     CHF=        0.9750         0.9713      +0.38%         +0.07%      +0.9753     +0.9707
 Sterling/Dollar  GBP=        1.4018         1.4090      -0.51%         +3.74%      +1.4091     +1.4008
 Dollar/Canadian  CAD=        1.2722         1.2669      +0.42%         +1.15%      +1.2735     +1.2633
 Australian/Doll  AUD=        0.7660         0.7728      -0.88%         -1.81%      +0.7731     +0.7658
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1965         1.1989      -0.20%         +2.36%      +1.2005     +1.1955
 Euro/Sterling    EURGBP=     0.8752         0.8763      -0.13%         -1.47%      +0.8790     +0.8735
 NZ Dollar/Dolar  NZD=        0.7207         0.7270      -0.87%         +1.71%      +0.7271     +0.7202
 Dollar/Norway    NOK=        7.8333         7.7906      +0.55%         -4.55%      +7.8460     +7.7868
 Euro/Norway      EURNOK=     9.6164         9.6195      -0.03%         -2.36%      +9.6305     +9.5997
 Dollar/Sweden    SEK=        8.4505         8.4032      -0.02%         +3.03%      +8.4595     +8.4041
 Euro/Sweden      EURSEK=     10.3721        10.3741     -0.02%         +5.42%      +10.3905    +10.3689
 
    
 (Additional reporting by Saikat Chatterjee in LONDON; Hideyuki
Sano in TOKYO; Editing by Bernadette Baum)
  
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