Early trade in New York: Dollar rises on Treasury yield spike

NEW YORK: The dollar rose on Friday as a fresh spike in Treasury yields reignited inflation fears and sparked a sell-off in riskier assets, allowing the safe haven greenback to recoup its losses from the prior session.

Market participants have grown wary in recent weeks of a possible spike in inflation caused by massive fiscal stimulus and pent-up consumer demand as the pace of vaccinations increases and economies reopen from coronavirus lockdowns. Treasuries sold off overnight, with the yield on the benchmark 10-year note rising above 1.6% to approach the one-year highs hit last week.

The dollar was up 0.53% at 91.928, retracing its losses from the prior session and leaving it on track to end the week little changed overall. The greenback hit 92.506 on Tuesday, which was its strongest since November.

Although the euro was down around 0.6% at $1.1918, it was set for a small weekly gain. Riskier currencies lost out on Friday, erasing recent gains. The Australian dollar - which is seen as a liquid proxy for risk appetite - fell by 0.71% to 0.77300 versus the US dollar.

The New Zealand dollar was down 0.97% against the US dollar at 0.7157. The Norwegian crown lost out to both the euro and dollar. Dollar-yen was up around 0.55%, changing hands at 109.095, close to the 109.235 reached on Tuesday which had been the yen's weakest since June 2020. Elsewhere, bitcoin dipped 2.5% to $56,311.83.11, having come close to, but not exceeded, the recent record high of $58,354.14.