The dollar maintains gains as expectations about Biden’s stimulus grow

LONDON (Reuters) – The dollar remained above three-year lows against major peers on Thursday as expectations over fiscal stimulus by President-elect Joe Biden boosted U.S. government bond yields.

The 10-year Treasury yield rose after CNN reported that the stimulus would be around $ 2 trillion, which favored the dollar.

In the first trading operations of the European morning, the dollar index changed little, with an increase of 0.04%, to 90,320, while investors expected Biden to give details later today of a plan of “trillions” of dollars in pandemic relief.

The dollar has risen in four of the last five trading sessions, as the prospect of greater stimulus has weighed on U.S. government bonds, causing the Treasury’s benchmark yield to exceed 1%. for the first time since March.

Expectations of the stimulus are already rising, but many analysts believe the rise in spending has already come at a price.

“We believe the fiscal cat has already come out of the bag: it would come as a big surprise to the markets after re-pricing last week,” ING analysts said. “The scope of the reflections trade to restart only at the back of this announcement is limited.”

In addition, the recent recovery of the currency is threatened by an accumulation of bearish dollar positions.

Currency speculators have not hit the dollar since mid-March, as investors’ growing appetite for riskier assets hurts demand for the green dollar.

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 rose 0.13% to 104.02 yen.

Bitcoin maintained the 10% gains achieved on Wednesday after slipping nearly $ 12,000 from last week’s record high of $ 42,000. On Thursday it rose 3%, to $ 38,860, to $ 30,261.13 as of Jan. 11.

Interest in the cryptocurrency has been growing as institutional investors began to buy intensely, seeing it as both a hedge of inflation and exposed to gains if adopted more widely.