TOKYO (Reuters) – The dollar extended its rebound from a three-year low against major pairs on Thursday, supported by higher U.S. yields as President-elect Joe Biden prepared to outline stimulus plans. massive tax.
The dollar index remained on Wednesday’s gains in early Asian trading as investors continued to squander bearish bets. 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.
Bitcoin also held on to the 10% gains achieved on Wednesday, as it bounced back after sliding nearly $ 12,000, from a record high of $ 42,000 last week.
Biden will give details Thursday about a $ 1 trillion plan in pandemic relief. The 10-year Treasury yield increased after CNN reported that the package would be around $ 2 trillion, which added support for the dollar.
However, many analysts expect the currency rebound to be temporary, as an accumulation of bearish dollar positions is achieved.
In the long run, they expect more stimulus from the United States to support the risk sentiment, weighing on the green dollar, which has traditionally been 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, Japanese FX strategist at Bank of America in Tokyo.
“I’m focusing on the gradual weakening of the dollar in 2021.”
Currency speculators have not hit the dollar since mid-March, as investors’ growing appetite for riskier assets hurts demand for the green dollar.
The dollar index rose 0.1% to 90,431 after gaining 0.3% overnight. On January 6, it fell to 89,206 for the first time since March 2018.
The euro fell 0.1% to $ 1.21,405 after falling 0.4% on Wednesday.
The greenback advanced 0.2% to 104,075 yen, adding a 0.1% rise previously.
Bitcoin traded slightly at $ 37,420 on Thursday, to $ 30,261.13 on 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 it was adopted more.
“This rushed sell that we saw recently, was heavily driven by futures markets,” where positions widened excessively and the resulting margin calls put downward pressure on the price of bitcoin, said Seth Melamed, the director General of Tokyo Liquid Exchange Operations Liquid.
“In the immediate markets, you just see this steady pace of buying.”
Reports by Kevin Buckland; Edited by Ana Nicolaci da Costa and Simon Cameron-Moore