Dollar bounces on rise in yields as trade war roils markets

By Rae Wee

SINGAPORE (Reuters) - The dollar rebounded somewhat connected Thursday acknowledgment to a emergence successful U.S. Treasury yields, though currencies traded successful choky ranges arsenic investors struggled to find the interaction of an escalating planetary commercialized warfare connected U.S. ostentation and growth.

U.S. President Donald Trump connected Wednesday threatened further tariffs connected European Union goods, arsenic large U.S. trading partners said they would retaliate for commercialized barriers already erected by him.

A emergence successful planetary commercialized tensions and worries implicit U.S. recession risks person rattled planetary markets and sparked immense volatility successful the overseas speech market, arsenic traders seesaw betwixt alleviation and angst implicit Trump's whipsawing argumentation changes.

Markets were a tad calmer successful the aboriginal Asian league connected Thursday arsenic investors got a interruption from the flurry of headlines astir U.S. commercialized policy.

The dollar roseate 0.05% against the yen to 148.31, recovering immoderate of its losses from earlier successful the week erstwhile it fell to a five-month debased against the Japanese currency, arsenic fears of an economical downturn successful the U.S. sparked a unreserved to the Japanese currency arsenic a harmless haven.

The Swiss franc likewise edged distant from Monday's three-month highest and past stood astatine 0.8817 per dollar.

Data released connected Wednesday showed U.S. ostentation roseate somewhat little than expected successful February, but the alleviation it offered could beryllium impermanent arsenic the information did not afloat seizure the cascade of Trump's tariffs.

"What is much uncertain is the outlook for aboriginal ostentation and the authorities of U.S. economical activity, acknowledgment mostly to the unpredictability of U.S. commercialized policy," said James Reilly, elder markets economist astatine Capital Economics.

"It is these issues driving markets, and (the) study gave small caller penetration into either of those."

But U.S. Treasury yields pushed higher arsenic traders wagered connected a pick-up successful ostentation down the line, with the benchmark 10-year output past dependable adjacent a one-week apical astatine 4.3047%.

The two-year output was small changed astatine 3.9866%.

That kept the dollar supported and knocked the euro distant from Tuesday's five-month top, with the azygous currency past fetching $1.0890.

Sterling ticked up 0.06% to $1.2968, portion the dollar scale edged distant from Tuesday's five-month debased and firmed astatine 103.57.

The Canadian dollar was small changed astatine C$1.4372.

The Bank of Canada connected Wednesday trimmed its cardinal argumentation complaint by 25 ground points and raised concerns astir inflationary pressures and weaker maturation stemming from commercialized uncertainty and Trump's tariffs.

"Tariffs airs ostentation pressures to the satellite economy, which would beryllium a nightmare for cardinal banks... cardinal bankers are conscionable being much cautious and keeping an unfastened caput to what's to come," said Carol Kong, a currency strategist astatine Commonwealth Bank of Australia.