FOREX-Dollar gains on reflation trade, Aussie recovers

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E (New throughout, updates prices, changes byline, dateline; previous LONDON) By Karen Brettell NEW YORK, March 1 (Reuters) - The dollar index rose to a three-week high on Monday as investors bet on faster growth and inflation in the United States, while the Australian dollar gained after Australia's central bank increased its bond purchases in a bid to stem rapidly rising yields. The dollar has gained in the past few sessions as U.S. government bond yields jump on expectations that growth and inflation will increase as the administration prepares new fiscal stimulus and vaccinations against COVID-19 become more widespread. Benchmark 10-year Treasury yields edged higher to 1.432% on Monday, but are holding below the one-year high of 1.614% reached on Thursday. "The dollar is trading relatively bid on the yield differential, on the growth expectation differentials," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. The euro is lagging meanwhile, as the region falls behind in growth expectations. "Everyone’s waiting for Europeans to catch up, both on the vaccination front and then on the stimulus front. When they do, that becomes the final piece of the puzzle that really propels global growth forward," Schlossberg said. The dollar index rose 0.28% to 91.009, after earlier reaching 91.127, the highest level since Feb. 8. The euro fell 0.17% against the greenback to $1.2048. Traders were also waiting for a speech later on Monday by President Christine Lagarde, who is under pressure to act against rising yields in the euro zone. "There is little doubt in my mind that central banks will eventually lean quite hard against a sustained rise in yields. They simply can’t afford to see it happen with debt so high," Deutsche Bank strategist Jim Reid wrote in a note. The Australian dollar rebounded from Friday's three-week lows after the Reserve Bank of Australia (RBA) increased its bond purchases to A$4 billion, raising expectations that other central banks could also buy more bonds if yields continue to surge. "That’s a very telling sign that central banks are not going to be intimidated by the bond market at this point," Schlossberg said. The Aussie was last at $0.7757, after dropping to $0.7693 on Friday. The RBA will hold its monthly policy meeting on Tuesday, and markets expect it to reinforce its forward guidance for three more years of near-zero rates. The safe haven yen reached 106.77 against the dollar, its weakest level since Aug. 28. In cryptocurrency markets, bitcoin rose 6.69% to $48,275 but was still off a record high of $58,354.14 hit on Feb. 21. ======================================================== Currency bid prices at 9:53AM (1453 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 91.0090 90.7680 +0.28% 1.142% +91.1270 +90.6830 Euro/Dollar $1.2048 $1.2070 -0.17% -1.38% +$1.2102 +$1.2029 Dollar/Yen 106.6300 106.5700 +0.02% +3.20% +106.7700 +106.4000 Euro/Yen 128.46 128.60 -0.11% +1.21% +128.9300 +128.3700 Dollar/Swiss 0.9143 0.9086 +0.65% +3.37% +0.9149 +0.9060 Sterling/Dollar $1.3920 $1.3923 -0.06% +1.85% +$1.3998 +$1.3905 Dollar/Canadian 1.2669 1.2740 -0.55% -0.50% +1.2734 +1.2655 Aussie/Dollar $0.7757 $0.7799 -0.54% +0.83% +$0.7773 +$0.7706 Euro/Swiss 1.1014 1.0968 +0.42% +1.93% +1.1023 +1.0964 Euro/Sterling 0.8654 0.8670 -0.18% -3.17% +0.8669 +0.8621 NZ $0.7268 $0.7231 +0.50% +1.20% +$0.7292 +$0.7227 Dollar/Dollar Dollar/Norway 8.5855 8.6665 -0.94% -0.02% +8.6610 +8.5760 Euro/Norway 10.3460 10.4481 -0.98% -1.16% +10.4640 +10.3347 Dollar/Sweden 8.4296 8.4359 -0.27% +2.85% +8.4927 +8.3980 Euro/Sweden 10.1591 10.1868 -0.27% +0.82% +10.2269 +10.1517 (Additional reporting by Julien Ponthus in London; Editing by Kevin Liffey)