Dollar heavy as clues sought on pace of U.S. recovery; bitcoin near record high

TOKYO (Reuters) – The greenback began the week pinned close to two-week lows on Monday as merchants questioned whether or not the restoration from the pandemic in the USA could be as quick as anticipated.

Bitcoin traded under $49,000 after pushing to a document $49,714.66 over the weekend, following endorsements final week by Tesla and BNY Mellon.

The greenback index was at 90.427, near final week’s low of 90.249 – a degree not seen since Jan. 27.

The gauge hit a two-month prime of 91.6 on Feb. 5 on hopes {that a} U.S. rebound would outpace different main economies, however has since retreated amid disappointing employment knowledge.

“The rebound within the greenback … was initiated by relative U.S. financial outperformance, or expectations thereof,” mentioned Shinichiro Kadota, senior foreign money strategist at Barclays Capital in Tokyo. “Now the market is on the lookout for precise proof that the U.S. economic system is outperforming.”

“The financial knowledge wants to enhance,” he mentioned.

The euro was little modified at $1.21215 after climbing 0.6% final week.

The greenback rose 0.2% to 105.09 yen, recovering from a number of the earlier week’s 0.4% loss.

Many monetary markets in Asia remained closed on Monday for Lunar New Yr, with the USA additionally out for Presidents Day.

There was a tug-of-war over the greenback’s path this yr with some market individuals anticipating it to strengthen because the U.S. economic system outperforms friends together with Europe.

Others view the U.S. restoration as a key driver in a world reflation narrative that ought to raise riskier belongings on the greenback’s expense.

“The U.S. outperformance story … has quite a bit additional to run due to fiscal stimulus and sooner vaccine deployment,” Westpac strategists wrote in a consumer observe.

“However ongoing aggressive U.S. reflationary fiscal and financial coverage settings will depart DXY on a sustained medium-term bear pattern,” the observe mentioned, referring to the greenback index.

Bitcoin final traded at $48,772, little modified from the document excessive. It surged roughly 25% final week for its greatest efficiency because the flip of the yr.