February 15, 2018 / 3:35 PM / in 8 months

FOREX-Dollar weakens further despite rising bond yields, hits 15-month low vs yen

 (Updates news, quotes, table, prices)
    * Dollar hits 15-month low against yen
    * 10-year Treasury yields hit four-year high
    * Worries over U.S. budget, current account deficits

    By Kate Duguid
    NEW YORK, Feb 15 (Reuters) - The dollar fell across the
board on Thursday, hitting a 15-month low against the yen, as
negative sentiment around the U.S. currency outweighed a rise in
10-year Treasury yields to their highest levels in four years.
    Analysts gave various explanations for the dollar's broad
weakness, which came as the yield on the benchmark U.S.
government bond climbed towards 3 percent, and as
stock markets and commodities rose. But most agreed it was a
long-term trend. 
   "Forex markets rotate from theme to theme all the time. The
theme right now is global growth and strong global growth has
historically pushed the dollar lower," said Greg Anderson,
global head of FX strategy at BMO Capital Markets in New York.
    The greenback had briefly jumped on Wednesday after data
showed U.S. inflation was stronger than expected in January,
bolstering expectations that the Federal Reserve could increase
interest rates as many as four times this year.
    But it quickly turned lower, eventually posting its worst
daily performance in three weeks against a basket of major
rivals. It added to those losses on Thursday, with the
dollar index hitting a two-week low of 88.585.
    Further evidence of rising inflation came in a report on
Thursday which showed U.S. producer prices accelerated in
January, boosted by strong gains in the cost of gasoline and
healthcare. There was no significant move in the dollar on the
news. 
    Some analysts suggested mounting worries over twin deficits
in the United States, amid a government spending splurge and
large corporate tax cuts, as a reason for dollar weakness.
    The U.S. national debt has topped $20 trillion, while the
2019 fiscal deficit is projected at near $1 trillion, including
deficit-financed tax cuts and two-year spending caps that
Congress passed last week.
    "I do hear worry from foreign investors that the U.S. is out
of control fiscally. The world doesn’t need a safe-haven
(currency) at the moment because we have strong growth. But to
the extent that we might need one in the future, the U.S. dollar
is a less-safe safe haven," said Anderson. 
    "The story I hear most frequently from people is it's the
re-emergence of the twin deficits," said RBC Capital Markets
head of currency strategy Adam Cole, in London, of the dollar's
persistent weakness. "There seem to be concerns on the U.S.
fiscal position and what that implies for the current account." 
  
    Against the yen, the dollar skidded as much as 0.8 percent
from Wednesday's close to 106.15 yen, its lowest since November
2016. 
    The euro briefly climbed back above $1.251 for the first
time in two weeks, trading up almost half a percent from its
last close, before easing back to just below that level.
    
    ========================================================
    Currency bid prices at 10:22AM (1522 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2481        $1.2448     +0.27%         +4.04%      +1.2510     +1.2449
 Dollar/Yen       JPY=        106.3800       107.0000    -0.58%         -5.58%      +107.0200   +106.1900
 Euro/Yen         EURJPY=     132.79         133.22      -0.32%         -1.77%      +133.2900   +132.5500
 Dollar/Swiss     CHF=        0.9242         0.9289      -0.51%         -5.14%      +0.9294     +0.9228
 Sterling/Dollar  GBP=        1.4062         1.3996      +0.47%         +4.07%      +1.4099     +1.3991
 Dollar/Canadian  CAD=        1.2512         1.2488      +0.19%         -0.52%      +1.2522     +1.2465
 Australian/Doll  AUD=        0.7914         0.7923      -0.11%         +1.45%      +0.7966     +0.7908
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1536         1.1568      -0.28%         -1.31%      +1.1575     +1.1532
 Euro/Sterling    EURGBP=     0.8876         0.8894      -0.20%         -0.08%      +0.8902     +0.8858
 NZ Dollar/Dolar  NZD=        0.7380         0.7368      +0.16%         +4.15%      +0.7410     +0.7364
 Dollar/Norway    NOK=        7.8011         7.7955      +0.07%         -4.95%      +7.8168     +7.7568
 Euro/Norway      EURNOK=     9.7383         9.7090      +0.30%         -1.12%      +9.7575     +9.6828
 Dollar/Sweden    SEK=        7.9542         7.9527      +0.26%         -3.02%      +7.9659     +7.9146
 Euro/Sweden      EURSEK=     9.9296         9.9042      +0.26%         +0.92%      +9.9362     +9.8922
 
 (Reporting by Kate Duguid and Jemima Kelly; Editing by Meredith
Mazzilli)
  
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