(Updates prices, adds more quotes)
* Break out in 10-year Treasury yields supports greenback
* Expectations of upbeat tone from ECB's Draghi help euro
* Commodities currencies still suffering from oil fall
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, March 9 The dollar hit a three-week high
against the yen on Thursday, on course for a fourth straight day
of gains after a strong ADP job number in the previous session
broke 10-year U.S. government bond yields out of a long-held
With eyes in Europe fixed on a meeting of the European
Central Bank expected to deliver a modestly more upbeat verdict
on the euro zone economy - but no policy action - the euro was
also marginally stronger at $1.0550.
The dollar surprised many analysts last week by struggling
as money markets flipped to back a rise in official U.S.
interest rates this month, and a number point to muted moves in
10-year yields as one element holding the currency back.
It broke above 2.52 percent for the first time this year on
Wednesday and was trading at close to 2.58 percent in early
trade in Europe on Thursday. That helped the dollar jet as much
as half a percent higher to 114.94 yen before settling.
Citi currency strategist Josh O'Byrne said expectations of a
steady recovery in Europe were also playing a role in those
moves, removing one of the factors that has dampened benchmark
bond yields globally.
"We broke 2.52 percent yesterday, which was the high of the
range in recent weeks and certainly there seems to be some more
optimism (around the dollar)," he said.
"Less dovish expectations on the ECB are helping diminish
some of the pressure on long-end yields in the U.S. too and that
is having more influence on the dollar against some of the
higher yielders and dollar yen."
By 1138 GMT, the dollar was trading 0.2 percent higher at
114.61 yen. The index of its broader strength against a basket
of currencies was roughly steady just above 102.
The ECB is set to keep policy on hold on Thursday as it
casts a cautious eye ahead to high-risk elections in the
Netherlands and France during an upsurge in populist,
But there is growing speculation in markets that improving
growth and rising inflation will allow it to begin to take a
step backwards later this year from the emergency stimulus for
the economy that has dominated since the 2008 financial crash.
A German banking association said that the bank should begin
on Thursday to prepare the ground for an exit from its
ultra-loose monetary policy.
Analysts from Goldman Sachs said the bank will have to
acknowledge the better activity data in its growth and inflation
"As such, we see a higher risk than usual that the ECB
strays off message at this meeting by discussing stronger
activity rather than reiterating its commitment to current
policy," they said.
"If that were to happen, euro pricing would likely respond."
Oil- and commodity-linked majors including the Canadian,
Australian and New Zealand dollars and the Norwegian crown all
hit multi-week lows after supply issues provoked a five-percent
slump in oil prices on Wednesday.
"The Canadian dollar has been a victim of hawkish interest
rate expectations in the United States, lower oil prices and a
Bank of Canada that has expressed concern over the outlook for
the Canadian economy," analysts from currencies exchange LMAX
said in a morning note.
"Wednesday’s stellar U.S. ADP print and another big slide in
oil have opened fresh 2017 lows."
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Toby Chopra)