* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Saikat Chatterjee
LONDON, July 9 (Reuters) – The Japanese yen weakened on Friday as a downward spiral in U.S. Treasury yields ran out of steam, but it was heading for its biggest weekly gain this year amid concerns about the global economic recovery.
Bonds have rallied this week with 10-year U.S. Treasury yields falling as much as 20 bps to a February low while stocks took a hammering worldwide amid growing concerns the fast-spreading Delta variant of COVID-19 could derail a revival that is already showing pockets of weakness.
“The market rhetoric is clearly shifting from transitory inflation to transitory recovery,” said Ipek Ozkardeskaya, a strategist at Swissquote Bank SA.
While the perceived safe-haven currencies including the yen and the franc weakened by 0.2% against the dollar in early London trading, the yen was on track to strengthen 0.9% this week, its biggest weekly rise since early November 2020.
The dollar index clawed back part of Thursday’s 0.36% slide, rising less than 0.1% to 92.454. On Wednesday, it had pushed to a three-month high of 92.844.
Broader sentiment remained weak thanks to a spike in coronavirus cases globally with stay-at-home orders in Sydney, Australia’s most populous city, tightened further. Britain also saw cases increasing.
The Aussie slipped 0.2% to $0.74175 after earlier touching a fresh low for the year at $0.7410. On Thursday, it posted a 0.7% decline.
New Zealand’s kiwi lost 0.1% to $0.69365, and dipped as low as $0.6923, matching the weakest level since November. It plunged more than 1% in the previous session.
The euro held on to most of a 0.45% jump from overnight, slipping less than 0.1% to $1.18355.
(Reporting by Saikat Chatterjee; Editing by Nick Macfie)