LONDON (Reuters) – The dollar remained above three-year lows against major peers on Thursday, with expectations of President-elect Joe Biden’s fiscal stimulus raising US government bond yields.
The 10-year Treasury yield increased after CNN said the stimulus would be around $ 2 trillion, adding support for the dollar.
Early in European morning trading, the dollar index was little changed, up 0.04% at 90.320, while investors expected Biden to provide details later today of a “trillion” dollar plan for pandemic relief .
The dollar has risen in four of the past five trading sessions, as the prospect of more stimulus weighed on US government bonds, sending the benchmark Treasury yield to over 1% for the first time since March.
Expectations are already high for the stimulus, but many analysts believe that the increase in spending has already been fixed.
“We feel that the fiscal cat has already left the stock market: it would take too long to surprise the markets after the price renegotiation seen last week,” said analysts at ING. “The scope for restarting the reflection trade based on this announcement alone is limited.”
In addition, the recent currency recovery is threatened by an increase in the dollar’s bearish positions.
Foreign exchange speculators have been without the dollar since mid-March, with investors’ growing appetite for riskier assets hampering demand for the dollar.
As the US stimulus supports the feeling of risk, it can 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 the 10% gains made on Wednesday, after falling nearly $ 12,000 from last week’s record of $ 42,000. It rose 3% to $ 38,860 on Thursday, from $ 30,261.13 on January 11.
Interest in the cryptocurrency has increased as institutional investors have started to buy heavily, seeing it both as a hedge against inflation and as exposed to gains if it becomes more widely adopted.
Kevin Buckland reporting; edition of Ana Nicolaci da Costa, Simon Cameron-Moore, Larry King