- Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
The dollar traded near two-week lows as demand for safer assets ebbed on Wednesday, with traders looking ahead to an expected recovery from the COVID-19 pandemic this year, driven by massive fiscal and monetary stimulus.
Bitcoin BTC=BTSP consolidated around $46,500 after reaching a new high at $48,216 overnight following Tesla's disclosure of a $1.5 billion investment in the leading cryptocurrency.
"The economic outlook for the year, according to market consensus, appears to be buoyant," said Michael McCarthy, chief strategist at CMC Markets in Sydney, pointing to the weaker dollar.
"Sentiment and positioning are key drivers of the market right now."
Traditionally viewed as a safe haven, the dollar has sunk against major peers as optimism over monetary and fiscal support from policymakers, robust corporate earnings and the prospect that coronavirus vaccines could hasten a return to normality in the United States and elsewhere have bolstered risk sentiment.
The dollar index =USD edged higher to 90.509 early in the Asian session on Wednesday, following a two-day loss that took it as low as 90.427 for the first time this month.
There has been a tug-of-war among traders over the impact on the dollar of President Joe Biden's planned $1.9 trillion fiscal stimulus package.
On one hand, it should speed a U.S. recovery relative to other countries, bolstering the currency; on the other, it is a major driver in a global reflation narrative that should lift riskier assets at the dollar's expense.
After a strong start to the year for the greenback, the latter view appears to be regaining sway -- with last week's U.S. jobs data providing the turning point, according to Westpac analysts.
"Friday's disappointing payrolls completely flattened the USD, that data point casting doubt on the budding U.S. outperformance narrative and refocusing minds on the prospect for sustained reflationary U.S. fiscal and monetary policy," they wrote in a client note on Wednesday.
"Nursing eye-catching losses, a test of 90 on the cards in coming days," the note said, referring to the dollar index.
The dollar added 0.1% to 104.68 yen JPY=EBS , after dipping as low as 104.5 for the first time this month in the previous session.
The euro EUR=EBS weakened less than 0.1% to $1.21105 following a three-day gain.
The British pound GBP= was about 0.1% lower at $1.3803 after renewing an almost three-year high at $1.382 overnight.
======================================================== Currency bid prices at 10:31AM (131 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.2110 $1.2121 -0.08% -0.88% +1.2119 +1.2110 Dollar/Yen JPY=D3 104.6720 104.5700 +0.02% +1.26% +104.6770 +104.5900 Euro/Yen EURJPY= 126.78 126.70 +0.06% -0.11% +126.8100 +126.6600 Dollar/Swiss CHF=EBS 0.8930 0.8923 +0.08% +0.94% +0.8931 +0.8925 Sterling/Dollar GBP=D3 1.3803 1.3813 -0.07% +1.04% +1.3815 +1.3804 Dollar/Canadian CAD=D3 1.2704 1.2692 +0.08% -0.25% +1.2706 +1.2694 Aussie/Dollar AUD=D3 0.7725 0.7739 -0.15% +0.45% +0.7742 +0.7727 NZ NZD=D3 0.7223 0.7240 -0.23% +0.58% +0.7242 +0.7223 Dollar/DollarAll spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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