TOKYO (Reuters) – The dollar has extended its three-year lows from a three-year high on Thursday, supported by higher US yields as President-elect Joe Biden prepares to outline plans. massive fiscal stimulus.
The dollar index held gains on Wednesday in early Asian trading, while investors continued to trade bearish bets. The dollar has risen in four of the last five trading sessions as the prospect of a higher stimulus has weighed on US government bonds, sending the Treasury’s benchmark yield above 1% for the first time since March.
Bitcoin also retained its 10% gains on Wednesday as it returned after falling nearly $ 12,000 from a record $ 42,000 last week.
Biden will provide details on Thursday about a plan for “trillions” of dollars in aid for the pandemic. The 10-year Treasury yield rose after CNN reported that the package would be about $ 2 trillion, adding support for the dollar.
However, many analysts expect the currency to bounce back temporarily, as an accumulation of dollar positions is shaken.
In the longer term, they expect more US incentives to support risk sentiment, weighing on the green dollar, which is traditionally considered a safe haven.
“I think positioning in risky assets is becoming a concern, so there could be a reduction in the dollar in the short term,” said Shusuke Yamada, chief Japanese FX strategist at Bank of America in Tokyo.
“I’m focusing on the gradual weakening of the dollar in 2021.”
Foreign exchange speculators have clearly outperformed the dollar since mid-March, as investors’ growing appetite for riskier assets has affected dollar demand.
The dollar index added 0.1% to 90,431 after gaining 0.3% overnight. It dropped to 89,206 on January 6, for the first time since March 2018.
The euro fell 0.1% to $ 1.21405 after falling 0.4% on Wednesday.
The green dollar advanced 0.2% to 104,075 yen, adding to a 0.1% increase previously.
Bitcoin was slightly lower at $ 37,420 on Thursday, up from $ 30,261.13 on January 11th.
Interest in cryptocurrency grew as institutional investors began to buy heavily, considering it both as a hedge of inflation and as being exposed to gains if it were adopted on a larger scale.
“The hasty sell-off we saw recently was largely driven by futures markets, where positions became overly broad and resulting margin calls put downward pressure on the price of bitcoin,” said Seth Melamed, chief operating officer. from Tokyo. liquid cryptocurrency exchange.
“In the spot markets, you only see this steady pace of buying.”
Reporting by Kevin Buckland; Edited by Ana Nicolaci da Costa and Simon Cameron-Moore