* Rising U.S. yields give short bettors pause for thought
* Dollar rises to two-week high vs EUR and GBP
* AUD, NZD slip to one-week low
By Tom Westbrook
SINGAPORE, Jan 11 (Reuters) - The dollar extended a rebound on Monday, as sharp gains in U.S. yields and hopes for more stimulus to boost the world's largest economy prompted some investors to temper bearish bets, pulling the currency further away from recent multi-year lows.
President-elect Joe Biden, who takes office on Jan. 20 with Democrats able to control both houses of Congress, has promised "trillions" in extra pandemic-relief spending. has pushed the yield on the benchmark 10-year U.S. debt US10YT=RR up more than 20 basis points to 1.1187% this year, which helped the dollar to a one-month high of 104.095 yen JPY= Monday as better rates gave pause to some dollar shorts.
The Australian and New Zealand dollars each fell more than 0.5% against the dollar to one-week lows, while the euro and sterling lost 0.3% to touch two-week lows. AUD/
The euro EUR= last traded at $1.2183 after climbing as high as $1.2349 last week.
"The underlying source of the revival has been the aftermath of the Senate elections and markets anticipating that we might get substantially more fiscal support for the U.S. economy," said National Australia Bank's head of FX strategy, Ray Attrill.
"Everyone's asking whether this changes the weaker dollar narrative - that's why I think we're getting a bit of a continuation of what we're seeing on Thursday and Friday."
Attrill said he was not buying a rebound yet, as shifts in relative yields tend to take a while to play out in currency markets, because extra stimulus is by no means certain and as other factors weighing on the dollar remain in place.
But with bets against the dollar such a crowded trade, the scale of selloff in the bond market since the Democrats won control of the Senate last week, has been enough to slow what has been a steep and steady decline since last March. US/
The dollar index =USD lost more than 12% since a three-year peak in March, however, it has bounced 1.2% from an almost three-year low last week to steady at 90.291 on Monday.
The Australian dollar AUD=D3 retreated further from last week's more-than-two-year high of $0.7819 to trade 0.7% lower at $0.7712 on Monday, unmoved by another solid month of local retail sales.
The kiwi NZD=D3 slipped 0.6% to $0.7194 and dollar gains were broad, if smaller, elsewhere in Asia.
"The weaker dollar narrative and broad-based ebullience for emerging markets have been challenged earlier in the year than we forecast, which may lead to a rethink of consensus trades, at least in the week ahead," Barclays (LON: BARC ) analysts said in a note.
"We stick to our non-consensus view that the dollar is likely to benefit from better growth and returns to capital over the remainder of the year."
Chinese inflation figures due at 0130 GMT will be watched for insight into China's economic recovery. Chinese trade figures are due later in the week along with U.S. retail sales, sentiment and production data.
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