FOREX-Dollar pummelled, Aussie soars as reflation trades grip FX markets - Yahoo Finance

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Saikat Chatterjee

LONDON, Feb 24 (Reuters) - The dollar remained at multi-yearlows against the Antipodean currencies and held near a one-monthlow versus the euro as reflation trades gripped the currencymarkets on Wednesday.

Federal Reserve Chair Jerome Powell reiterated on Tuesdaythat U.S. interest rates will remain low and the Fed will keepbuying bonds to support the U.S. economy. The dollar resumed itsdecline towards the lows recorded at the start of the year aftera brief rally in late January.

Money flowed from safe havens like the dollar, Swiss francand the Japanese yen towards currencies expected to benefit froma pick-up in global trade, and to countries like Britain thatare recovering quickly from the coronavirus pandemic.

"The extension of weakness in safe haven currencies such asthe Swiss franc appears consistent with building confidence inthe global economic recovery," MUFG strategists said in a note.

Some notable moves were seen in the currency markets thisweek. The franc weakened below 1.10 francs per euro for thefirst time since the end of 2019, with a global rise in bondyields also curtailing the appeal of the safe-haven currencies.

The dollar's weakness in recent days has been moreremarkable as it comes against the backdrop of a broader rise inU.S. yields. Benchmark 10-year borrowing costs areholding near their highest in nearly a year.

The dollar index against a basket of six majorcurrencies was at 90.111, near the six-week low of 89.941 itreached overnight.

"Risk appetite has improved a lot, and this leaves thedollar at a big disadvantage," said Junichi Ishikawa, foreignexchange strategist at IG Securities.

The Australian dollar, which tends to benefit fromrising metal and energy prices, rose to a three-year high of$0.7945 before paring gains to trade 0.1% stronger at $0.7914.

The euro bought $1.21495, close to the one-monthhigh of $1.2180 set overnight. The British poundclimbed past $1.42 overnight for the first time since April2018.

(Reporting by Saikat Chatterjee; editing by Larry King)

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