* Euro struggles after fresh developments to French
* Dollar sags vs yen following slide by US Treasury yields
* Aussie, kiwi little changed
(Updates prices, adds details and quotes)
By Shinichi Saoshiro
TOKYO, Feb 20 A slide in U.S. bond yields
pressured the dollar against the yen on Monday, while the euro
struggled for traction after suffering significant losses at the
end of last week on renewed concerns about the upcoming French
Markets, already nervous over the possibility of a win for
far-right, anti-European Union candidate Marine Le Pen, were
jolted after two French hard-left candidates late on Friday said
they were discussing cooperation in their bid for the country's
The fear in markets is that a unified left-wing front cause
the centrist vote to shift towards Le Pen.
The latest spike in European political risks nudged down the
dollar against the yen by pushing down Treasury yields to
one-week lows of 2.4 percent.
The dollar was little changed at 113.090 yen, not far
from 112.620, its lowest since Feb. 9 touched on Friday.
The dollar index against a basket of currencies was steady
at 100.930. The index had risen for 10 straight days
earlier this month before losing momentum despite a string of
solid U.S. data, to the frustration of dollar bulls.
"It is hard for dollar/yen to move higher when the 10-year
Treasury yield, which initially rose to as high as 2.6 percent,
is not stuck around 2.4 percent," said Koji Fukaya, president of
FPG Securities in Tokyo.
The Treasury 10-year yield rose above 2.6
percent in December to a two-year high when expectations were at
their peak that Donald Trump would embark on large fiscal
stimulus and reflationary policies once he became president.
"There is also the possibility of the next U.S. rate hike
being pushed back to May instead of March. The Fed might not be
inclined to hike rates, and thus induce a rise in yields, just
on the Trump administration's deregulation moves and tax cuts,"
Hopes of developments in fiscal stimulus plans under Trump
have not materialised yet, cancelling out some of the recent
A combative presidential news conference on Thursday raised
doubts over how effective the Trump administration will be in
pushing through its economic agenda.
The euro crawled up 0.1 percent to 1.0613 after
dropping 0.6 percent on Friday. The common currency nudged up
0.2 percent to 120.010 yen after plumbing an 11-day
low of 119.650. It had slid nearly 1 percent on Friday against
"The latest round of risk aversion that supported the yen is
likely to be a sporadic one, as equities are still well
supported globally. It is not the typical 'risk off' that
engulfs the broader financial markets and leads to the
safe-haven buying of the yen," said Masafumi Yamamoto, chief
forex strategist at Mizuho Securities.
Elsewhere, the pound was flat at $1.2414 after
dropping 0.7 percent on Friday, after a surprise third monthly
fall in British retail sales pointed to weakening consumer
The Australian dollar dipped 0.1 percent to $0.7670
but still in touch of a 3-1/2 month high of $0.7732 scaled last
The Aussie has enjoyed steady support this year from a surge
in the price of iron ore, the country's chief export. But
uncertainty regarding the country's monetary policy and economic
performance has prevented the currency from making further
The New Zealand dollar was down 0.1 percent at $0.7177
. Focus was on Wednesday's global dairy price auction.
The kiwi is often impacted by the price of milk, New Zealand's
top export product.
(Editing by Shri Navaratnam)