LONDON (Reuters) – The dollar held above the 2018 low against other major currencies on Friday ahead of new U.S. jobs data that could suggest the level of fiscal stimulus needed to stimulate the coronavirus-affected economy.
The near-three-year greenback broke Thursday as a rise in U.S. yields led to some forgetting a betish bet on the currency frontier, with traders taking profits against the euro in particular.
Democrats gained effective control of the Senate this week, while unrest erupted over Washington. Congressional Democrats on Friday pressured President Donald Trump for the second time after his false claims about an election ball helped spur a move that took the U.S. Capitol by storm. [nL1N2JJ0UU]
The Democratic Senate seat will allow President Joe Biden to push through increased spending, which analysts say will fuel desire and be negative for bonds and the dollar.
“I think once this euphoria dies, the dollar is likely to bounce back from the recession, because I don’t think the Fed will be so eager to taper, ”Marshall Gittler, head of investment research at BDSwiss, said in a note.
“I think the U.S. employment picture seems to be weakening the picture of other countries so the U.S. cycle of tension is likely to weaken. That paints the picture for the dollar, in my opinion. ”
The dollar index fell 7% in 2020 and as much as 0.9% in the first few days of the new year in anticipation of U.S. fiscal stimulus.
On Friday, the index last rose 0.1% at around the 90 mark, following the biggest rise in more than two months on Thursday. It is still on track for a weekly decline.
U.S. nonfarm payrolls data for December are due at 1330 GMT, with the median expectation in a Reuters poll for a gain of 71,000 jobs, down from a gain of 245,000 in November.
Several major currencies weakened against the dollar before regaining some ground, with the euro dipping as much as 0.5% down at $ 1.22130, while the Japanese yen touched a new three-week low at 104.090. The euro was last down 0.2%, while the yen had recovered flat.
Bitcoin hit a new full-time level, up more than 5% on the day, after going through $ 40,000 for the first time on Thursday. [nL1N2JJ06V]
Reporting by John Withers, Further Report by Kevin Buckland in Tokyo; Edited by Kim Coghill and Kevin Liffey