LONDON (Reuters) – The dollar broke off its lowest levels from 2018 to its highest level in Thursday week, its gains partially offset by safe-harbor purchases following violence on Capitol Hill and profits from investors who had been betting on the euro.
The dollar index, which measures the U.S. currency against a basket of peers, rose 0.6% to 89.886.
Hundreds of supporters of President Donald Trump blocked the U.S. Capitol Wednesday in an attempt to reverse his election loss, fighting with police in the halls and delaying confirmation of President’s victory Democratic president Joe Biden for hours.
The broader money markets have almost disturbed the outlook for chaos in Washington, although analysts said the dollar’s rise Thursday reflects some safe-haven buying.
The greenback has declined more than 13% since the March 2020 peak. While the dollar position remains bearish, analysts ’views on the currency’s prospects for 2021 are increasingly mixed.
Conversely, some argue that rising inflation is expected to be based on expected U.S. government stimulus real pressure levels and will put pressure on the dollar, especially with a Federal Reserve expected to remain stable. rates and allows over inflation above 2%. Flat rates are real flat rates adjusted for inflation.
On the other hand, some analysts say that an extended period of bearish position on the dollar, as well as an increase in Treasury yields, could help build the currency in the long run.
“The rise in nominal yields and inflation expectations is an interesting backdrop for asset prices,” said Jane Foley, head of FX strategy at Rabobank.
“As long as levels are virtually weak the dollar could remain under pressure, especially with the consensus view that the Fed will allow inflation to exceed its 2% target. “
Foley said if the market starts to see the U.S. economy so likely to perform better on growth and start under suspicion the Fed could be less likely to continue the yield curve , the dollar could find support.
EURO FHAD
She also noted that the market would remain long on the euro, and the slow spread of vaccines in Europe could boost profits. The single currency fell as much as 0.6% to $ 1.2245.
Bank of America Merrill Lynch said the long position of the euro market also makes it “one of the most vulnerable G10 currencies in terms of overall market risk” and, following the sale of the dollar last year, that the currency is shared Europe has now reached long-term equilibrium.
The Australian dollar slipped 0.83% to 77.39 US cents after hitting a near three-year high of 78.195 on Wednesday.
The dollar gained 0.6% to 103.64 yen, touching the highest level against the Japanese currency in more than a week.
The Yuan was relatively flat at 6.4655 per dollar after Chinese authorities expressed a desire for a slower pace of gain.
The comments from the Foreign Exchange Administration (SAFE) on Wednesday remain about 10% on the greenback from May last year as China’s economic reversal has revived the world’s pandemic to lead.
The British pound traded 0.2 lower at $ 1.3577 as it was heading below the nearly three-year high of $ 1.3703 that was rubbed on Monday.
Bitcoin marked a new high of $ 37,800 on Thursday, extending an increase of more than 800% from mid-March. It eventually traded at $ 37,491.
Reciting with Ritvik Carvalho; additional commentary by Kevin Buckland and Stanley White in TOKYO; Edited by Emelia Sithole-Matarise and Alex Richardson