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FOREX-Dollar on back foot as U.S. yields drop despite strengthening U.S. recovery

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    * Greenback weakens with 10-year Treasury yield below 1.7%
    * Strong U.S. data lifted Wall Street stocks to record highs
    * Bitcoin near $59,000 as crypto market cap tops $2 trillion
    * Graphic: World FX rates tmsnrt.rs/2RBWI5E

    By Kevin Buckland
    TOKYO, April 6 (Reuters) - The dollar stabilised near an
almost two-week low versus a basket of its peers on Tuesday,
moving in tandem with a retreat in Treasury yields from recent
peaks despite signs of a robust U.S. economic recovery.    
    The dollar index sank as low as 92.527 in the Asian
session, its weakest since March 25. The softer turn comes less
than a week after hitting an almost five-month top at 93.439.
    The yen continued to recover from a more than
one-year low near 111 per dollar, briefly strengthening back
below 110 on Tuesday. The euro extended its rise from a
nearly five-month trough close to $1.17 to trade as high as
    The greenback has risen strongly this year, along with
Treasury yields, as investors bet on a faster U.S. pandemic
rebound than other developed nations amid massive stimulus and
aggressive vaccinations.
    But the dollar’s drop this week even after Friday's
much-stronger-than-expected monthly payrolls data was followed
on Monday by the highest reading for services industry activity
on record may indicate that much of the bullish outlook is
priced in for now.
    "While the U.S. does look exceptional, COVID normalization
over time means the rest of the world will converge," Mark
McCormick, the global head of foreign-exchange strategy at TD
Securities, wrote in a client note.
    "The USD level has now outstripped the pickup in non-U.S.
growth expectations," meaning "there's room for a USD pause" in
its recent uptrend, he wrote.
    Benchmark 10-year Treasury yields continued
their retreat Tuesday, dipping below 1.7% early in the Asian
session, from a peak of 1.776% last week - a level not seen
since January of last year.
    That's even as the robust economic outlook boosted U.S.
stocks to record highs. 
    However, Westpac strategists see room for further dollar
gains, saying the run of strong data "cement the USD’s
unbeatable growth rebound credentials."
    "DXY has not capitalised on the strong macro tailwinds,"
they wrote, referring to the dollar index.
    "Pullbacks into 92 should be bought for a run to the 2020 Q3
highs around 94.50."
    Elsewhere, the Australian dollar, considered a proxy
for risk appetite, slipped slightly to $0.76415 on Tuesday,
after rallying 0.8% to start the week. The Reserve Bank of
Australia left policy unchanged on Tuesday, as expected.

    The British pound rose to a 2-1/2-week high of $1.3915 in
Asia, building on the previous session's 0.6% advance.
    In cryptocurrencies, bitcoin traded around
$58,882 on Tuesday, easing back a little after a two-day gain.
It reached a record high at $61,781.83 in the middle of last
    The cryptocurrency market capitalization hit an all-time
peak of $2 trillion on Monday, according to data and market
trackers CoinGecko and Blockfolio, as gains over the last
several months attracted demand from both institutional and
retail investors.

    Currency bid prices at 536 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1809        $1.1812     -0.02%         -3.34%      +1.1821     +1.1800
 Dollar/Yen                   110.2120       110.2150    -0.05%         +6.65%      +110.3920   +110.1600
 Euro/Yen                     130.16         130.13      +0.02%         +2.55%      +130.3300   +130.0700
 Dollar/Swiss                 0.9371         0.9363      +0.10%         +5.93%      +0.9383     +0.9359
 Sterling/Dollar              1.3911         1.3908      +0.04%         +1.84%      +1.3914     +1.3890
 Dollar/Canadian              1.2534         1.2518      +0.13%         -1.57%      +1.2542     +1.2517
 Aussie/Dollar                0.7646         0.7652      -0.07%         -0.59%      +0.7659     +0.7631
 NZ                           0.7055         0.7060      -0.04%         -1.73%      +0.7068     +0.7044
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ 

 (Reporting by Kevin Buckland
Editing by Shri Navaratnam)

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