LONDON, Dec 6 (Reuters) - The dollar ticked higher on Monday
as Treasury yields rose off last week's 2-1/2-month lows
following news that initial observations suggested those
suffering from the Omicron COVID-19 strain only had mild
The Omicron news from South Africa helped reverse some of
the moves from Friday, when Wall Street had sold off heavily.
That selloff had taken 10-year Treasury yields below 1.4%
for the first time since late-September and boosted the
safe-haven yen and Swiss franc. The dollar had tumbled as much
as 0.4% lower against the Japanese currency. .
Friday's greenback losses also followed a below-forecast
jobs report, though the data did little to shake market
expectations the Federal Reserve will accelerate the pace of
unwinding stimulus and raise interest rates starting next year.
The dollar index inched 0.10% higher at 96.29, within
range of November's 16-month peak of 96.938. It was also 0.2%
higher against the yen at 113.05 yen and rebounded 0.4% to the
"The dollar is capitalising on the narrative of the Fed
sticking to its plans for quicker tapering, which is what we had
last week from (Fed Chair Jerome) Powell," said ING Bank FX
strategist Francesco Pesole.
Dollar long positions climbed for a second straight week to
the highest since June 2019, according to data from the U.S.
CFTC, while bearish euro positions rose to stand at the highest
since March 2020.
The euro slipped a quarter percent to the dollar.
Pesole said a further dollar long build-up was likely, given
diverging policy expectations, especially against the euro.
Meanwhile, the Australian dollar was up 0.5% to
$0.7035, scraping itself off a 13-month low. The kiwi
rose 0.1% to $0.6750.
Riskier currencies were also supported by a slight
re-steepening of the Treasury yield curve, where the gap between
two and 10-year yields widened slightly after touching the
narrowest in a year on Friday.
Analysts reckon the curve will flatten further, however,
especially if inflation data due later in the week reinforces
policy tightening expectations from the Fed.
"If you look at the shape of the yield curve, the flattening
of the 2-10 segment normally brings some underperformance in
commodity currencies," Pesole said.
Elsewhere, cryptocurrencies nursed big losses from a wild
weekend that at one stage crushed bitcoin more than
20%. Bitcoin found support around $49,000 on Monday.
(Reporting by Sujata Rao and Tom Westbrook)