TOKYO (Reuters) – The dollar fell to its lowest level in a week on Tuesday, when investors began to have doubts about the scale of a recent recovery driven by expectations of a faster recovery from the pandemic in the United States. than elsewhere.
The spotlight remained on bitcoin, which hit a record high of more than $ 47,000, based on an almost 20% overnight increase, the largest since 2017, after Tesla Inc announced a $ 1.5 billion investment in digital asset.
The dollar index weakened 0.2%, to 90.75 in the Asian session, and fell to 90.963 for the first time since February 1.
The U.S. currency has been retreating since Friday, when disappointing job data took the wind out of a two-week race that lifted it to 91.6, the biggest increase in more than two months.
Investors raised the dollar thanks to the faster launch of the vaccine in the United States compared to most other countries, and as Democrats adopted President Joe Biden’s $ 1.9 trillion COVID-19 aid package.
Many analysts, however, see that massive fiscal spending, coupled with the Federal Reserve’s ultra-easy monetary policy, is dragging the dollar down in the long run.
“The bottom line is that a big stimulus is likely to pass soon, exacerbating the widening US current account deficit and weighing on the dollar,” said Joseph Capurso, monetary analyst at Commonwealth Bank of Australia in a customer note.
Europe’s “delayed” vaccination program will limit the euro in the short term, but the continent is expected to recover by summer, after which the single currency may rise to $ 1.28 for the first time since 2014, he said.
The euro rose 0.2% to $ 1.20775 on Tuesday, above the two-month low of $ 1.9520 touched on Friday.
The pound sterling has renewed its highs since May 2018 by rising to $ 1.3774 in Asia. The last trade was 0.3%, at $ 1.3774.
The dollar fell 0.3% to 104,925 yen, after rising to 105,765 at the end of last week, for the first time since October.
Elsewhere, Tesla sent a wave of bitcoins by saying in its 2020 annual report on Monday that it had bought $ 1.5 billion of the world’s most popular cryptocurrency as part of its broad investment policy and that it hoped to start to accept the digital asset as payment for their products “in the near future.”
“This is a turning point in the way we view digital currencies,” said Junichi Ishikawa, foreign exchange strategist at IG Securities in Tokyo.
“From now on, bitcoin will be genuinely considered an asset available for selection by asset managers in their portfolios.”
Bitcoin traded at $ 46,400 after reaching a new high of $ 47,565.86 on Tuesday.
The rival virtual currency, ethereum, changed hands at $ 1,733.14 after reaching an unprecedented $ 1,784.85 on Monday.
Risky fiat currencies also received a boost, as bullish stock markets increased sentiment.
The Australian dollar gained 0.3% to 77.252 US cents, while its New Zealand pair added 0.4% to 72.47 cents.
Westpac is targeting an advance of 75 US cents for the New Zealand currency, wrote strategist Imre Speizer in a note to the client published on Tuesday.
“The markets recognized the success of Covid’s management in New Zealand and the subsequent economic recovery, but recent economic data has recognized
it surprised even the most optimistic analysts, ”said the note.
Kevin Buckland reporting; additional reporting by Stanley White; Editing by Shri Navaratnam