LONDON (Reuters) – The dollar held over three-year recessions relative to major peers on Thursday as expectations of President-elect Joe Biden’s fiscal stimulus pushed US government bond yields higher.
The 10-year government yield rose after CNN reported that the stimulus will be around $ 2 trillion, adding support to the dollar.
In early European morning trading, the dollar index had changed slightly, rising 0.04% at 90,320 as investors waited for Biden to provide details later today of a plan for “trillions”
The dollar has risen in four of the last five trading sessions, as the prospect of more stimulus has weighed on US government bonds and sent Treasury benchmark interest rates above 1% for the first time since March.
Expectations are already running high for the stimulus, but many analysts believe the spending push has already been priced.
“We feel that the fiscal cat is already out of the bag: it would take a lot to surprise the markets after the re-pricing seen last week,” ING analysts said. “The possibility that the reflection trade can be restarted on the back of this announcement alone is limited.
Moreover, the recent recovery of the currency is threatened by a build-up of bearish dollar positions.
FX speculators have been net shorting dollars since mid-March as investors’ growing appetite for more risky assets hurt demand for greenbacks.
Because American stimulus supports risk sentiment, it can weigh dollars that are considered a safe haven.
The euro slipped 0.05% to $ 1,214 after slipping 0.4% on Wednesday.
The dollar rose 0.13% to 104.02 yen.
Bitcoin held on to 10% gains achieved on Wednesday after slipping nearly $ 12,000 from last week’s record high of $ 42,000. It rose 3% to $ 38,860 on Thursday, up from as low as $ 30,261.13 on January 11th.
Interest in the cryptocurrency has been soaring as institutional investors began to buy heavily, viewing it as both an inflation hedge and a gain if it were adopted more broadly.
Reporting by Kevin Buckland; editing by Ana Nicolaci da Costa, Simon Cameron-Moore, Larry King