Vaccine hopes boost euro, dollar on back foot as yields off highs



* Euro propped up by vaccination catch-up hopes

* Dollar loses traction as U.S. bond yields subdued

* Euro, yen at highest level vs dollar since early March

* Graphic: World FX rates Link

By Hideyuki Sano

TOKYO, April 20 (Reuters) - The dollar wallowed near a six-week low against its peers on Tuesday as the euro led a rally on the back of a brightening outlook for the region's vaccination programme.

The dollar had already been losing traction as U.S. bond yields have hovered below a 14-month peak touched last month, reducing the greenback's yield attraction.

The euro rose to $1.2038 EUR= , having touched a six-week high of $1.2048 on Monday while the British pound gained 1% overnight, its second biggest daily gain so far this year, and last stood at $1.3989 GBP=D4 .

Some analysts say support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of COVID-19 vaccine by BioNTech 22UAy.DE and Pfizer PFE.N .

"Europe is really the main region which is going to see accelerating vaccinations this quarter. And later in the year, we will see accelerating vaccinations, broadly, in emerging market economies," Zach Pandl, co-head of foreign exchange strategy for Goldman Sachs in New York.

"The U.S. got ahead of the curve in the first quarter, but other countries are going to be quickly catching up."

The dollar index dropped to 91.085 =USD , having lost 2.5% from its five-month peak hit last month.

The moves are the reverse of what was happening in the first three months of the year when the dollar gained against the very same major currencies as yields rose on U.S. Treasuries and offered higher returns on the greenback.

Against the yen, the dollar fell to as low as 107.975 yen, its weakest in more than six weeks, and last traded at 108.15 JPY= .

The 10-year U.S. Treasuries yield hit a one-month low of 1.529% last week. Though it ticked up to 1.605% by Monday it stood well below its March peak of 1.776%, when investors speculated the Federal Reserve could tone down its dovish policy guidance.

"One of the probably most important developments in macro markets over the last month has been a stability in U.S. rate . That also opens up room for dollar weakness against a broad set of currencies," said Goldman's Pandl.

The Australian dollar held firm at $0.7769 AUD=D4 after hitting a one-month high of $0.7784 on Monday. The offshore Chinese yuan firmed to 6.5075 per dollar CNH= , near its highest level in almost one month.

Gold also hit a 7-week high of $1,790 per ounce on Monday and last stood at $1,770.6 XAU= .

Bitcoin changed hands at $54,122 BTC=BTSP , down 1.5% after four straight days of losses.



World FX rates Link



Reporting by Hideyuki Sano
Editing by Shri Navaratnam

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.