The dollar holds gains as expectations for Biden’s stimulus rise

LONDON (Reuters) – The dollar has stayed above three-year lows against major colleagues on Thursday as expectations for fiscal stimulus by President-elect Joe Biden have raised US government bond yields.

The 10-year Treasury yield rose after CNN reported the stimulus would be about $ 2 trillion, adding support for the dollar.

At the start of European morning trading, the dollar index was slightly changed, up 0.04% to 90,320, while investors waited for Biden to provide details later today about a plan for “trillions” of dollars in case of the pandemic.

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.

Expectations are already rising for the stimulus, but many analysts believe the spending momentum has already been assessed.

“We believe that the fiscal cat is already out of the bag: it would take a long time to surprise the markets after the re-establishment of prices seen last week,” said ING analysts. “The scope of trade relations with reflections to resume only on the back of this notice is limited.”

Moreover, the recent recovery of the currency is threatened by the accumulation of dollar positions down.

Foreign exchange speculators have clearly outperformed the dollar since mid-March, as investors’ growing appetite for riskier assets has affected dollar demand.

Because the US stimulus supports the sense of risk, it could weigh on the dollar, which is considered a safe haven.

The euro fell 0.05% to $ 1.214 after falling 0.4% on Wednesday.

The dollar advanced 0.13% to 104.02 yen.

Bitcoin maintained its 10% gain on Wednesday, after falling nearly $ 12,000 from last week’s record $ 42,000. It rose 3% to $ 38,860 on Thursday, up from $ 30,261.13 on Jan. 11.

Interest in cryptocurrency has grown as institutional investors have started to buy a lot, considering it both as a hedge of inflation and as being exposed to gains if it becomes more widely adopted.