FOREX-Dollar resumes rebound from multi-year lows


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    * Dollar index trades higher
    * Sterling gains on euro

 (New throughout, updates prices, market activity, comments to
U.S. market open; previous LONDON)
    By Saqib Iqbal Ahmed
    NEW YORK, Jan 13 (Reuters) - The U.S. dollar advanced across
the board on Wednesday, shaking off the weakness of the previous
session, as it continued its recent rebound from last week's
near three-year low.
    A rise in U.S. Treasury yields, driven by expectations of
higher government spending under the Joe Biden administration,
has helped boost the battered dollar in recent sessions.
    The greenback has also found support from expectations of a
continued economic recovery in the United States, even as
countries in Europe resort to lockdowns to fend off a second
COVID-19 wave.
    "You are seeing a continuance of the U.S. outperformance
trade," Karl Schamotta, chief market strategist at Cambridge
Global Payments in Toronto.
    U.S. Treasury yields retreated a little on Wednesday after
Federal Reserve officials pushed back against tighter monetary
conditions anytime soon, even with the prospect of higher
inflation ahead.
    Yields on the benchmark Treasury note  US10YT=RR  dropped to
1.110% in early trade, down from an almost 10-month high of
1.187% on Tuesday.*:nL1N2JO1N0
    Still, the pop in the 10-year Treasury yield above 1% has
put a firmer floor under the dollar, Joe Manimbo, senior market
analyst at Western Union Business Solutions, in Washington, said
in a note.
    The U.S. dollar index  =USD  was 0.344% higher at 90.335.
    Data on Wednesday showed U.S. consumer prices increased
solidly in December amid a surge in the cost of gasoline, though
underlying inflation remained tame as the COVID-19 pandemic
weighed on the labor market and the services
    "Overall, the firm headline December CPI gain was mostly due
to an energy price pop that is extending into January, though
lean readings for the core components suggest little risk of the
inflation figures heating up anytime soon," Michael Englund,
chief economist at Action Economics, said in a note.
    Sterling hit a seven-week high against the euro on
Wednesday, building on gains during the previous session when
the Bank of England's governor dismissed negative rates, while
optimism over the pace of Britain's vaccination rollout also
offered support.*:nL1N2JO0R6  GBP/ 

World FX rates
The dollar versus Treasury yields
 (Reporting by Saqib Iqbal Ahmed; editing by Philippa Fletcher)
 ((; @SaqibReports; +1 646 223
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