- Dollar gained most in two months overnight as positions unwound
- Many analysts see dollar resuming decline on increased stimulus
- Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
The dollar held on to its biggest gain in more than two months against major peers on Friday as a rise in U.S. yields triggered some unwinding of bearish bets on the currency.
The greenback bounced off a nearly three-year low, with traders taking profits against the euro in particular, following a slide in the dollar index of nearly 7% in 2020 and as much as 0.9% in the new year amid expectations of U.S. fiscal stimulus.
Democrats won effective control of the Senate this week, giving President-elect Joe Biden scope to push through more spending, which analysts say will be negative for bonds and the dollar.
The benchmark 10-year Treasury yield topped 1% on Wednesday for the first time since March.
Dollar "positioning is stretched and the backup in U.S. yields has some investors nervous," TD Securities analysts wrote in a client note.
"The (dollar's) move, however, is more consolidative in tone than it is a sign of a bigger correction."
Investors now await U.S. nonfarm payrolls later on Friday for clues on whether significantly more stimulus will be needed to keep the economic recovery alive.
The dollar index =USD was little changed at 89.841 in early Asian trading, after dipping to an almost three-year low of 89.206 on Wednesday. It rose more than half a percent on Thursday, but remains on track for a weekly decline.
The euro EUR=EBS was mostly flat at $1.22685 following Thursday's 0.5% drop.
The riskier Aussie dollar AUD= was also little changed at 77.695 U.S. cents after sliding 0.5% in the previous session.
The greenback bought 103.820 yen JPY=EBS after gaining 0.7% to close at 103.830 in New York.
Bitcoin BTC=BTSP traded 0.2% lower at $39,418 after smashing through $40,000 for the first time on Thursday and soaring as high as $40,420. The digital currency crossed the $20,000 milestone less than a month ago, on Dec. 16, and has rallied more than 700% since March.
======================================================== Currency bid prices at 9:37AM (037 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.2261 $1.2270 -0.07% +0.36% +1.2272 +1.2262 Dollar/Yen JPY=D3 103.7750 103.8300 +0.00% +0.53% +103.8670 +103.8350 Euro/Yen EURJPY= 127.24 127.37 -0.10% +0.25% +127.4200 +127.2700 Dollar/Swiss CHF=EBS 0.8854 0.8855 -0.05% +0.04% +0.8855 +0.8851 Sterling/Dollar GBP=D3 1.3560 1.3565 -0.01% -0.72% +1.3571 +1.3560 Dollar/Canadian CAD=D3 1.2684 1.2690 -0.04% -0.38% +1.2693 +1.2678 Aussie/Dollar AUD=D3 0.7761 0.7769 -0.08% +0.90% +0.7772 +0.7759 NZ NZD=D3 0.7258 0.7256 +0.15% +1.20% +0.7265 +0.7253 Dollar/DollarAll spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
