FOREX-Dollar licks wounds after drop to 7-week trough amid lower U.S. yields

* Yen sets fresh seven-week high as stocks decline

* Commodity currencies weaker after drop in oil

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

By Kevin Buckland

TOKYO, April 21 (Reuters) - The dollar languished on Wednesday, hovering just above a seven-week low with subdued U.S. bond yields reducing the currency's yield appeal.

The safe-haven greenback got some respite from a pullback in world stocks from record highs as flare ups in coronavirus infections from India to Canada soured the outlook for a quick global recovery.

The safety bid also bolstered the yen JPY=EBS , which climbed to a fresh seven-week peak of 107.88 per dollar on Wednesday.

The dollar index =USD , which tracks the U.S. currency against six major peers, was at 91.196 early in the Asian trading day after slumping as low as 90.856 on Tuesday for the first time since March 3. It has declined 2.2% so far this month.

The index "has broken down through a key short-term support level at 91.30 and can see further downside to the low 90s," with the euro rising to around $1.22, Westpac strategists wrote in a client note.

"We were looking for the (index) to top in Q3, when second derivative U.S. rebound measures crest and Europe gets her vax act together, but the early indications are that vaccinations across Europe are picking up pace already," Westpac said.

The single currency traded at $1.2039, after touching a seven-week high of $1.2079 overnight.

The European Central Bank decides policy on Thursday, with the Federal Reserve following next week.

The benchmark 10-year Treasury yield US10YT=RR was around 1.56%, not far from its lowest since mid-March, as it continued to consolidate following its retreat from the 14-month high at 1.7760% reached at the end of last month.

Declines in U.S. yields and the dollar in April have come as evidence mounted that the Fed would be slower in tightening monetary policy than it had appeared to the market, analysts said.

Some encouragement for the euro came from the announcement that the European Union has secured an additional 100 million doses of the COVID-19 vaccine produced by BioNTech 22UAy.DE and Pfizer (NYSE: PFE ) PFE.N . though, pandemic developments triggered investor caution.

India reported 1,761 deaths from COVID-19, its highest daily toll, while Canada and the United States extended a land-border closure for non-essential travellers.

On Wall Street, travel stocks weighed on sentiment, with airline and cruise operators falling sharply.

Oil fell, dragging commodity-linked currencies lower overnight.

The Canadian dollar CAD=D4 traded at C$1.26050 to the greenback in Asia, following its biggest plunge in nearly two months on Tuesday. The Bank of Canada is due to announce a policy decision later Wednesday. Australian dollar, a barometer for risk appetite, edged higher to $0.77335 after sliding 0.4% overnight.

In cryptocurrencies, bitcoin BTC=BTSP traded around $56,000, consolidating following its dip to as low as $51,541.16 on Sunday. It set a record high at $64,895.22 on April 14.

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Currency bid prices at 056 GMT Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.2036

$1.2036

+0.00%

-1.49%

+1.2044

+1.2031 Dollar/Yen

JPY=EBS

108.0650

108.0950

-0.01%

+4.64%

+108.1270 +107.8800 Euro/Yen

130.08

-0.02%

+2.47%

+130.1100 +129.8900

S>

Dollar/Swiss

CHF=EBS

0.9160

0.9159

+0.02%

+3.55%

+0.9161

+0.9154 Sterling/Dollar GBP=D3

1.3936

1.3938

+0.02%

+2.04%

+1.3946

+1.3934 Dollar/Canadian CAD=D3

1.2608

1.2612

-0.05%

-1.01%

+1.2615

+1.2603 Aussie/Dollar

AUD=D3

0.7725

0.7725

+0.02%

+0.44%

+0.7735

+0.7721 NZ

NZD=D3

0.7173

0.7170

+0.07%

-0.08%

+0.7180

+0.7164 Dollar/Dollar

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

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https://tmsnrt.rs/2RBWI5E

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