DM Monitoring
TOKYO: The dollar slumped to its lowest in a week on Tuesday as investors began entertaining doubts about the scale of a recent rally driven by expectations of a faster pandemic recovery in the United States than elsewhere.
The spotlight remained on bitcoin as it reached a record above $47,000, building on a nearly 20% surge overnight that was the biggest since 2017, after Tesla Inc announced a $1.5 billion investment in the digital asset. The dollar index weakened 0.2% to 90.75 in the Asian session, and dipped to 90.963 for the first time since Feb. 1.
The U.S. currency has been in retreat since Friday, when disappointing jobs data knocked the wind out of a two-week run that had lifted it to a more than two-month high of 91.6.
Investors had pushed up the greenback thanks to a faster U.S. vaccine rollout relative to most other countries, and as Democrats moved to fast-track President Joe Biden’s $1.9 trillion COVID-19 relief package.
Many analysts, though, see that massive fiscal spending coupled with continued ultra-easy Federal Reserve monetary policy dragging down the dollar in the longer term.
“The bottom line is a large stimulus is highly likely to pass soon, exacerbating the widening in the U.S. current account deficit, and weighing on the USD,” Commonwealth Bank of Australia currency analyst Joseph Capurso said in a client note.
Europe’s “lagging” vaccination program will cap the euro near-term but the continent should catch up by the summer, after which the single currency could rally to $1.28 for the first time since 2014, he said.
The euro rose 0.2% to $1.20775 on Tuesday, up from the two-month low of $1.9520 touched Friday.
The British pound renewed its highs since May 2018 by climbing to $1.3784 in Asia. It last traded up 0.3% at $1.3774.
