LONDON (Reuters) – The dollar held up above three-year lows against key peers on Thursday as expectations of President-elect Joe Biden’s fiscal stimulus pushed up government bond yields Americans on the rise.
The 10-year Treasury yield rose after CNN said the stimulus would be around $ 2 trillion, adding support to the dollar.
At the start of the European morning session, the dollar index was little changed, up 0.04% to 90.320, as investors waited for Biden to give details later today on a “trillion” plan. dollars for pandemic relief.
The dollar has risen in four of the past five trading sessions as the prospect of further stimulus weighed on U.S. government bonds, pushing the benchmark Treasury yield above 1% for the first times since March.
Expectations are already high for the stimulus, but many analysts believe the spending surge has already been factored in.
“We think 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 ability to restart reflation trading on the back of this one ad is limited.”
In addition, the currency’s recent rally is threatened by an accumulation of bearish positions in the dollar.
Currency speculators have been sharply short on the dollar since mid-March, as growing investor appetite for riskier assets has hurt demand for the greenback.
Because the US stimulus measures support risk sentiment, they could weigh on the dollar, seen as 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 retained the 10% gains made on Wednesday after slipping nearly $ 12,000 from last week’s record of $ 42,000. It rose 3% to $ 38,860 on Thursday, from $ 30,261.13 on Jan.11.
Interest in the cryptocurrency exploded as institutional investors began to buy heavily, seeing it both as a hedge against inflation and as prone to gains if adopted more widely.
Reporting by Kevin Buckland; edited by Ana Nicolaci da Costa, Simon Cameron-Moore, Larry King