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FOREX-Surging U.S. bond yields lift dollar to 11-month high

Published 15/11/2016, 07:23 am
© Reuters.  FOREX-Surging U.S. bond yields lift dollar to 11-month high
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* U.S. yields highest since early January

* Euro hits 11-month low vs dollar, yen weakest since June

* Yuan at pre-2010 trough, when offshore market was launched (Updates market, adds quote)

By Richard Leong

NEW YORK, Nov 14 (Reuters) - The dollar rose to an 11-month high against a basket of major currencies on Monday, in step with a jump in U.S. bond yields as traders bet fiscal and trade policies under a Donald Trump administration would stoke inflation.

Trump's stunning U.S. presidential win last week also sparked expectations of similar victories in Europe in the coming months. Worries over a rising tide of nationalist sentiment and restrictions on trade across Europe pressured the euro, analysts said.

China's yuan CNH= fell to its weakest against the dollar since before the launch of its offshore market in 2010.

"A lot of the move with the dollar has to do with higher yields," said Christopher Vecchio, currency analyst at FXCM in New York. "It's a seismic moment for markets."

The dollar index was 1.1 percent higher at 100.10 after touching 100.22 earlier on Monday, its highest since Dec. 3, 2015. .DXY

The benchmark 10-year Treasury note yield rose as high as 2.30 percent, its highest since early January, while a bond market gauge on investors' 10-year inflation expectations hit its highest level in over two years. US10YT=RR USBEI10Y=RR

"The outlook for the U.S. hasn't looked this good for a while. It's hard to se how the dollar will sell off much from here," said Paresh Upadhyaya, director of currency strategy at Pioneer Investments in Boston.

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Upbeat technical signals would also support greenback's current rally, Upadhyaya said.

Higher U.S. yields have lifted European and Japanese yields as those economies continue to struggle with weak growth and inflation. This could force the European Central Bank and Bank of Japan to stick to their ultra-loose monetary policies for a longer period, analysts said.

The euro shed 1.1 percent at $1.073 after hitting its lowest level against the greenback since Dec. 3, 2015, while the dollar was up 1.8 percent at 108.43 yen after reaching its strongest level since June 23. EUR= JPY=

The yield on 10-year German Bunds hit 0.397 percent, the highest since late January, and the yield on 10-year Japanese government bonds ended at -0.013 percent, hovering at its highest level in two months. DE10YT=RR JP10YT=RR

The yuan has weakened on worries that Trump and the Republican-controlled U.S. Congress may slap tougher restrictions on Chinese imports.

The Chinese currency was down 0.5 percent against the dollar at 6.8596 yuan. ========================================================

Currency bid prices at 3:12PM (2012 GMT) Description

Last

U.S. Close Pct Change

Previous

Session

Euro/Dollar

$1.0726

$1.0850

-1.14% Dollar/Yen

108.4600

106.6700

+1.68% Euro/Yen

116.38

115.83

+0.47% Dollar/Swiss

0.9979

0.9875

+1.05% Sterling/Dollar 1.2486

1.2599

-0.90% Dollar/Canadian 1.3560

1.3540

+0.15% Australian/Doll 0.7535

0.7550

-0.20% ar

Euro/Swiss

1.0713

1.0716

-0.03% Euro/Sterling

0.8589

0.8622

-0.38% NZ Dollar/Dolar 0.7089

0.7115

-0.37% Dollar/Norway

8.4748

8.4032

+0.85% Euro/Norway

9.0939

9.1286

-0.38% Dollar/Sweden

9.1611

9.0912

-0.38% Euro/Sweden

9.8279

9.8650

-0.38%

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