TOKYO (Reuters) – The dollar maintained a four-day gain against major peers on Tuesday as a major fiscal stimulus was expected to push U.S. output higher.
President Joe Biden, who will take office on January 20 with his ruling Democratic Party, has pledged “trillions” in further pandemic relief spending.
The dollar index has rebounded from a nearly three-year low reached last week as the U.S. Treasury’s 10-year benchmark yield rose 1% for the first time since March and has risen as high as 1.148% overnight.
The support from a rise in output so far has raised concerns that the increased consumption could spur faster inflation, which would normally make the greenback so attractive.
Many analysts expect the U.S. currency to begin the decline that the dollar index saw near 7% in 2020 amid stimulus spending of a better risk sentiment and vaccine spreads clarifying the global economic outlook.
“It’s complicated by the fact that higher U.S. yields are kicking the dollar, but a stimulus could support U.S. equities, and the dollar would remain weak,” said Osamu Takashima, head of strategy. G10 FX at Citigroup Global Markets Japan in Tokyo.
“In the medium term, we remain bearish on the dollar. Dollar funds look expensive. ”
Speculators in the FX market are very bearish on the dollar, U.S. Commodity Futures Trading Commission data showed on Friday.
The dollar index remained unchanged at 90.514 in early Asian trading, after rising as high as 90.73 overnight for the first time since December 21. It fell to 89.206 on January 6, a level not seen since March 2018.
The greenback slipped 0.1% to 104.175 yen, after rising to a one-month high of 104.40 on Monday.
The euro remained broadly stable at $ 1.2151 after slipping to 1.21320 in the previous session for the first time since December 21.
Meanwhile, bitcoin was trading below $ 35,000 as its red-hot rally has declined since going up to a high of $ 42,000 on Jan. 8.
Reciting with Kevin Buckland; Edited by Sam Holmes