* Dollar heads back towards 1-year high
* Kiwi jumps then weakens after inflation reading
* Sterling dips despite hawkish BoE governor talk
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
LONDON, Oct 18 (Reuters) - The U.S. dollar gained broadly on
Monday, rebounding towards a one-year high hit last week as
slowing economic growth in China and firmer U.S. Treasury yields
boosted the appeal of the greenback with the Japanese yen among
the major losers.
Three data points over the weekend, namely strong inflation
data in New Zealand, hawkish comments from the Bank of England
and slowing growth in China has reaffirmed the broad theme of
rising inflation and slowing growth in global markets.
Investors have chosen to trade that theme by buying the
greenback against its rivals while simultaneously dumping
currencies of commodity importers like Japan.
Latest weekly positioning data in currency markets showed
hedge funds have ramped up their net bearish bets on the
Japanese yen to their biggest levels since May 2019 while
increasing their bullish bets on the greenback.
"Higher Treasury yields combined with Chinas weak GDP
numbers are spurring demand for the U.S. dollar and other safe
haven currencies on Monday," said Raffi Boyadjian, an investment
strategist at brokerage XM.
U.S. Treasury yields firmed on Monday, extending a trend in
recent weeks with five-year bond yields rising to
their highest levels since February 2020 as investors ramped up
bets that the U.S. Federal Reserve was preparing to raise
interest rates as early as next year.
The inflation outlook has also prompted expectations of
earlier tightening of global monetary policy, with Danske Bank
expecting as much as two rate hikes from the Fed in the second
half of next year.
"For some time our central argument has rested on two
factors coming together to support the dollar, namely the
moderation in global growth and the Fed taking a gradual path
towards eventual rate hikes," HSBC analysts said in a note.
"This occurred sooner than we expected."
The dollar index rose 0.1% to 94.05, edging it back
toward last week's one-year high of 94.563 which was the highest
level since September 2020.
The yen was close to a new three-year low, with the dollar
last up 0.1% at 114.36 yen, close to Friday's 114.47
level that was last hit in October 2018.
In New Zealand, where consumer prices zoomed higher at their
fastest clip since 2010, analysts said the central bank would
need to stay the course on its hiking trajectory even as the
lockdown of Auckland was extended.
The kiwi jumped almost 0.5% to a one-month high of
$0.7105 before easing back to trade down 0.2% at $0.7056 after a
decade-high quarterly inflation reading.
Sterling slipped 0.1% to $1.3735 despite hawkish
weekend remarks from Bank of England Governor Andrew Bailey who
said policymakers "will have to act" as energy prices drive
consumer prices higher.
In other data highlights, China's economic growth hit its
slowest pace in a year in the third quarter, with power
shortages crimping factory output - while in commodities, crude
prices rose more than 1% to test 2018 highs.
The yuan eased slightly after the data. But taken
together, China's slowdown, power crunch and worldwide signs
that pressure from energy costs is hurting, seemed to turn
investors broadly cautious as they brace for a bumpy period.
In cryptocurrencies, bitcoin, riding high on
hopes for U.S. approval of a futures-based exchange traded fund
that would funnel cash into the sector, hovered just shy of its
record peak of $64,895. It last bought $60,956.
(Additional reporting by Tommy Wilkes
Editing by Philippa Fletcher)