* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Karen Brettell
NEW YORK, March 4, (Reuters) - The dollar pared earlier gains on Thursday before an appearance by Federal Reserve Chairman Jerome Powell that will be watched for any sign the Fed is uncomfortable with U.S. Treasury yield increases.
The dollar has gained along with U.S. government bond yields as impending U.S. fiscal stimulus adds fuel to expectations of higher inflation and the rollout of vaccines against COVID-19 heightens optimism that the economy headed for recovery.
"The U.S. is assuming the leadership position on growth matters, fiscal dominance and certainly vaccinations," said Mazen Issa, senior FX strategist at TD Securities in New York.
The dollar index =USD was little changed on the day at 91.094, after earlier rising to 91.223. The euro EUR=EBS dipped 0.19% to $1.2039.
Investors want to see whether Powell expresses concern about a recent sell-off in Treasuries and if there is any change in his assessment of the economy before the Fed's next meeting, ending March 17.
Benchmark 10-year Treasury yields US10YT=RR were last 1.47% after earlier rising as high as 1.49%.
"Comments that he (Powell) is monitoring events in the Treasury market might be enough to calm things down, encourage a return to high-yield FX and a softer dollar, but no such concern would suggest the Fed is happy for U.S. Treasury yields to ‘find the right level' … potentially triggering another spike in U.S. yields and more dollar short-covering," ING said in a note to clients.
The Swiss franc and the Japanese yen continued their recent weakness. They have been hurt expectations the U.S. will lead global growth, which some analysts are calling U.S. exceptionalism.
"The traditional (funding currencies) like euro, yen and Swiss, look to be particular laggers in that environment under a higher U.S. yield backdrop," said TD's Issa.
The franc CHF=D3 weakened as far as 0.9253, the lowest since Sept. 28. The yen JPY=D3 reached 107.48, its weakest since July 20.
Higher risk currencies, including the Australian dollar, by contrast, are positioned to outperform. The Aussie AUD=D3 was last up 0.22% on the day at $0.7792, holding below three-year highs of $0.8007 reached last week.
In the cryptocurrency market, bitcoin BTC=BTSP fell 1.23% to $49,775. Ether ETH=BTSP gained 1.06% to $1,583.
Bitcoin has surged 78% so far this year as it gains more acceptance in the financial services industry, but the U.S. financial regulator is likely to start working on guidelines for digital assets, which could increase scrutiny of cryptocurrencies. bid prices at 9:42AM (1442 GMT) Description
RIC
Last
U.S. Close Pct Change
YTD Pct
High Bid
Low Bid
Previous
Change
Session
Dollar index
=USD
91.0940
91.0970
+0.01%
1.237%
+91.2230
+90.9700 Euro/Dollar
EUR=EBS
$1.2039
$1.2062
-0.19%
-1.46%
+$1.2065
+$1.2026 Dollar/Yen
JPY=D3
107.3850
106.9600
+0.45%
+4.02%
+107.4850 +106.9900 Euro/Yen
EURJPY=
129.29
129.08
+0.16%
+1.86%
+129.3800 +128.9200 Dollar/Swiss
0.9242
0.9200
+0.44%
+4.45%
+0.9253
+0.9190 Sterling/Dollar GBP=D3
$1.3979
$1.3950
+0.22%
+2.33%
+$1.3980
+$1.3920 Dollar/Canadian CAD=D3
1.2627
1.2656
-0.22%
-0.83%
+1.2674
+1.2617 Aussie/Dollar
AUD=D3
$0.7792
$0.7775
+0.22%
+1.29%
+$0.7814
+$0.7753 Euro/Swiss
EURCHF=
1.1127
1.1094
+0.30%
+2.96%
+1.1141
+1.1077 Euro/Sterling
EURGBP=
0.8612
0.8642
-0.35%
-3.64%
+0.8655
+0.8611 NZ
NZD=D3
$0.7251
$0.7246
+0.11%
+1.02%
+$0.7272
+$0.7227 Dollar/Dollar
Dollar/Norway
NOK=D3
8.4835
8.4915
-0.03%
-1.14%
+8.5485
+8.4840 Euro/Norway
EURNOK=
10.2155
10.2459
-0.30%
-2.40%
+10.2879
+10.2143 Dollar/Sweden
8.4319
8.4217
-0.02%
+2.87%
+8.4555
+8.4105 Euro/Sweden
EURSEK=
10.1520
10.1544
-0.02%
+0.75%
+10.1755
+10.1500
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https://tmsnrt.rs/2RBWI5E
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