* Dollar index falls to two-week low
* Yen, euro, sterling strengthen against dollar
* Bitcoin soars to fresh record high
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E (New throughout, updates prices, market activity and comments)
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 9 (Reuters) - The dollar fell to two-week lows on Tuesday in choppy trading, led by losses against the yen and euro, as risk sentiment improved in the afternoon session amid stock market gains and as U.S. Treasury yields rose.
Bitcoin BTC=BTSP soared to a record high, headed toward the $50,000 milestone. It has surged more than 1,000% since March 2020 and analysts said forecasts of bitcoin hitting $100,000 this year no longer seem far-fetched.
Shares on Wall Street traded higher in the afternoon. Treasury yields rose from their lows as the dollar extended its losses .N US/
"The FX market has been taking some of its cue from the equity market," said Simon Harvey, senior FX market analyst at Monex Europe in London.
"There are heightened expectations that the actual stimulus package would be higher than expected. The Biden administration is going through reconciliation which means a less timely release of stimulus but a larger package," he added.
The dollar has risen as Democrats in the U.S. Congress moved to fast-track President Joe Biden's $1.9 trillion COVID-19 relief package. But some analysts say massive fiscal spending and continued ultra-easy Federal Reserve monetary policy will ultimately be a broad headwind for the dollar.
U.S. benchmark 10-year U.S. Treasury yields US10YT=RR rose to near March 2020 highs on Monday as investors bet on a faster economic recovery than many of peers. U.S. 10-year yields were last 1.16%.
The dollar index .DXY was 0.6% lower at 90.54, after earlier hitting a two-week low.
Disappointing U.S. jobs data on Friday knocked the wind out of a two-week run that had lifted the dollar =USD to a more than two-month high of 91.60.
Shaun Osborne, chief FX strategist, at Scotiabank in Toronto said dollar losses at this point were a little premature, "especially as positioning indicators suggest that active traders continue to reduce what remains a fairly significant U.S. dollar short exposure."
BLISTERING BITCOIN
Cryptocurrencies were the biggest beneficiary of the weakening dollar. Bitcoin BTC=BTSP rocketed above $48,000, building on a nearly 20% surge overnight after Tesla Inc TSLA.O announced a $1.5 billion investment in the digital asset.
Japanese yen JPY=EBS was another major beneficiary, rising 0.6% against the U.S. dollar to 104.69 yen. Earlier, the dollar fell to a two-week low of 104.50 yen.
The yen has become increasingly correlated with outright yields rather than an indicator of broad risk sentiment. A 90-day rolling correlation between yen and U.S. yields has strengthened considerably since the final quarter of 2020.
Elsewhere, the euro EUR=EBS rose 0.5% to $1.2104 on Tuesday, up from a two-month low of $1.1952 touched Friday.
The British pound GBP=D3 climbed to $1.3816, its highest since May 2018. It last traded up 0.6% at $1.3811.
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Currency bid prices at 3:29PM (2029 GMT) Description
RIC
Last
U.S. Close Pct Change
YTD Pct
High Bid
Low Bid
Previous
Change
Session
Dollar index
=USD
90.4480
90.9530
-0.54%
0.519%
+90.9630
+90.4270 Euro/Dollar
EUR=EBS
$1.2117
$1.2050
+0.56%
-0.82%
+$1.2121
+$1.2049 Dollar/Yen
JPY=D3
104.5650
105.2100
-0.60%
+1.24%
+105.2550 +104.5100 Euro/Yen
EURJPY=
126.70
126.78
-0.06%
-0.17%
+126.8400 +126.4400 Dollar/Swiss
0.8923
0.8989
-0.73%
+0.86%
+0.8990
+0.8920 Sterling/Dollar GBP=D3
$1.3810
$1.3742
+0.52%
+1.11%
+$1.3816
+$1.3739 Dollar/Canadian CAD=D3
1.2700
1.2740
-0.31%
-0.26%
+1.2766
+1.2695 Aussie/Dollar
AUD=D3
$0.7736
$0.7704
+0.42%
+0.57%
+$0.7740
+$0.7701 Euro/Swiss
EURCHF=
1.0812
1.0829
-0.16%
+0.03%
+1.0833
+1.0805 Euro/Sterling
EURGBP=
0.8771
0.8769
+0.02%
-1.85%
+0.8798
+0.8763 NZ
NZD=D3
$0.7237
$0.7220
+0.26%
+0.81%
+$0.7254
+$0.7216 Dollar/Dollar
Dollar/Norway
NOK=D3
8.4445
8.5205
-0.88%
-1.65%
+8.5000
+8.4455 Euro/Norway
EURNOK=
10.2348
10.2550
-0.20%
-2.23%
+10.2725
+10.2320 Dollar/Sweden
8.3191
8.3870
-0.17%
+1.50%
+8.3962
+8.3170 Euro/Sweden
EURSEK=
10.0809
10.0983
-0.17%
+0.04%
+10.1255
+10.0780
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates
https://tmsnrt.rs/2RBWI5E USD-POSITIONS
https://tmsnrt.rs/36UYmsX
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