Dollar stands tall as U.S. 10-year bond yield nears 3%


"We're on another high for the year for dollar yields and it's not boding well for gold", said a Hong Kong-based trader.

U.S. Treasuries rose, leading most European government bonds higher, as investors hit pause on a selloff that took benchmark rates within a whisker of 3 percent.

Bond yields in the eurozone and United Kingdom were also higher on Monday but 10-year gilt and Bund benchmarks remain below their peaks for the year. The 10-year yield stood at 2.43 percent at the end of 2017. That was its highest since September 2008.

LONDON, April 24 (Reuters) - Euro zone government bonds steadied on Tuesday as the prospect of heavy debt redemptions and a weaker economic climate countered the effect of rising U.S. Treasury yields.

"The entire market is watching that rates move and if we manage to break and extend higher the [US] dollar will follow", wrote Brad Bechtel, global head of FX at Jefferies, in a note Monday, Bloomberg reported. "While it's a bit early for investors to pack in the consensus short dollar view, the weaker shorts are indeed getting pared", he added.

The WSJ Dollar Index, which measures the US currency against a basket of 16 others, was recently up 0.6% at 84.90 on gains against the euro, yen and emerging markets.

"Over the past two months European Central Bank rate hike expectations have corrected lower and [EUROZONE] rates have retreated significantly from their February highs", said Norbert Aul, a strategist at UBS, who noted that "confidence in an ever-stronger growth momentum has been dented", resulting in euro yields finding "a floor".

On Monday, the dollar had grown almost 1 percent for its biggest daily percentage rise in almost one month, gaining more strength after breaking the 108 yen level.

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The yen is considered a safe haven that rises during times of economic, political, and geopolitical uncertainties.

While rising yields can lead investors away from equities, the robust earnings season gave reason for confidence.

Meanwhile, US Treasury Secretary Steven Mnuchin stated over the weekend that he may travel to China, which is a move that could alleviate the tensions between the US and China, the world's two largest economies.

Russian Federation raised gold holdings by 10.3 tonnes to 1,890.9 tonnes in March, International Monetary Fund data showed on Monday.

The gains in U.S. bond yields have derailed emerging market currencies and bond market as well as those in Asia.

Higher US yields can put pressure on the currencies of emerging market countries that run current account deficits such as Indonesia and India, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

The MSCI Emerging Market Index fell less than 0.05 percent.

The Indonesian rupiah briefly hit two-year low of 13,898 per dollar after its subdued movement early on.