FOREX-Dollar near 2-week high as US bond yields edge up

* Rising U.S. bond yields help underpin the dollar

* U.S. 10-year bond yield hits highest since Jan. 2014

* Dollar index trades near Friday’s two-week high

* Against the yen, dollar touches 2-month high (Updates prices, adds comments)

By Masayuki Kitano

SINGAPORE, April 23 (Reuters) - The dollar traded near a two-week high against a basket of major currencies on Monday, bolstered by rising U.S. bond yields, while easing concerns over global political risks weighed on the safe haven yen.

The dollar’s index against a basket of six major peers edged up 0.1 percent to 90.401, staying within sight of a two-week high of 90.477 set on Friday.

Rising U.S. bond yields helped underpin the greenback, with the U.S. 10-year Treasury yield touching a peak of 2.979 percent in Asian trade, the highest since January 2014.

Concerns that recent rises in global oil prices could add to inflationary pressures, as well as increases in U.S. debt issuance, are likely contributing to the rise in Treasury yields, said Teppei Ino, a Singapore-based analyst for MUFG Bank.

“So this rise in yields is probably not something that should be welcomed,” Ino said.

“The market reaction for now is for the dollar to strengthen, but at the same time the dollar index hasn’t risen above its recent trading ranges,” Ino added.

The dollar index has traded in a range of about 88.25 to 91.00 since around the middle of January.

The rise in U.S. bond yields pressured emerging Asian currencies, with the Indonesian rupiah hitting a two-year low of 13,895 per dollar.

YEN EDGES LOWER

Against the yen, the dollar hit a two-month high of 107.89 yen, and last changed hands at 107.80 yen, up 0.2 percent on the day.

Easing concerns over global political risks weighed on the Japanese currency, market participants said.

The yen tends to attract demand in times of economic uncertainty and market turmoil, and sell off when confidence returns.

North Korea said on Saturday it would immediately suspend nuclear and missile tests, scrap its nuclear test site and pursue economic growth and peace instead. It made these comments ahead of planned summits with South Korea and the United States.

“The dollar momentum...is probably going to carry the way at least until the next negative headline comes out,” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

Even traders who had been bearish on the dollar seem to be looking for opportunities to take long positions, with the greenback seen underpinned for now by higher U.S. bond yields, Innes added.

Besides concerns over geopolitical risks, worries over U.S.-China trade tensions also appear to be waning, Innes said.

U.S. Treasury Secretary Steven Mnuchin said on Saturday he may travel to China, a move that could ease tensions between the world’s two largest economies.

The euro eased 0.1 percent to $1.2274, having set a two-week low of $1.2250 on Friday.

The common currency had slipped last week as investors trimmed long positions in the euro ahead of this week’s European Central Bank policy meeting at which policymakers are largely expected to signal no change in policy.

Sterling last changed hands at $1.4016, up 0.1 percent on the day. Last week, it fell 1.7 percent, its biggest weekly drop since early February.

The pound fell last week on weaker-than-expected inflation and retail sales data and comments from Bank of England (BOE) Governor Mark Carney on Thursday, which traders interpreted as the BOE being less committed to raising rates in May due to recent “mixed” data. (Editing by Sam Holmes and Jacqueline Wong)

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