TOKYO (Reuters) – The dollar rebounded from a nearly three-year low on Friday after U.S. Federal Reserve Chairman Jerome Powell said interest rates would never rise anytime soon.
Details of a $ 1.9 trillion stimulus by President Joe Biden on Thursday failed to further support the greenback, with the main points of the plan already reported by the media.
Bitcoin continued to recover after falling nearly $ 12,000 from the $ 42,000 record reached last week, summarizing $ 40,000 overnight.
The dollar index has risen after reaching its lowest level since March 2018 last week, as more stimulus on U.S. government bonds was expected, adding a 10-year benchmark yield Finance above 1% for first time since March.
While many analysts predict that the greenback will begin the recession it saw slip by nearly 7% last year against major peers as the economy slows. global recovery from the coronavirus pandemic, there is growing concern that the increase in yield will reduce that weakness.
“The baseline issue remains for a major acceleration in the global economy, which has historically been positive for most currencies against the U.S. dollar,”
Westpac money analyst Sean Callow said.
“But I think there is a potential for at least a debate over whether the US dollar will be as weak as people would expect. ”
The dollar index remained unchanged at 90.319 after moving slightly lower overnight. It went back as high as 90.73 at the beginning of this week from as low as 89.206 on January 6th.
Powell said in a live interview with a professor at Princeton University on Thursday that the economy is still a long way from where the Fed wants to be, and sees no reason to change its very appropriate position “until the work done well and truthfully. ”
The central bank’s asset purchase program has put pressure on the dollar as it increases the supply of the currency, reducing its value.
The dollar fluctuated only at 103.77 yen after slipping 0.1% overnight.
The euro fell 0.1% to $ 1.21395, on track for a three-day decline.
“This means that a monetary policy will remain loose for a long time, maintaining a very negative return and attracting other USD rallies,” Commonwealth Bank of Australia currency analyst Kim Mundy wrote in a note.
The most risky Aussie dollar slipped 0.3% to 77.560 U.S. cents, pushing a 0.6% rise from the previous session.
The Chinese yuan entered, backed by China’s central bank’s decision to drain some money from the banking system while keeping interest rates unchanged. The views of mobile investors confirmed that it is slowly shifting to a sharp bias in monetary policy as economic activity kicks back to pre-pandemic levels.
In the spot market, Yuan opened on land at 6.4673 per dollar and changed hands at 6.4703 at noon, about 0.1% or 57 pips firmer than last late session.
Bitcoin slipped about 1% to $ 38,729, after climbing as high as $ 40,112.78 overnight.
Reciting with Kevin Buckland; Edited by Gerry Doyle and Kim Coghill