* USD is extending rebound from near 3-year low
* Bitcoin will fall 19% to face the biggest one-day fall since March (New across, updating prices, market activity, views to the open US market; previously LONDON)
NEW YORK, Jan 11 (Reuters) – The dollar went down higher across the board on Monday, extending a rebound from last year’s near 3-year low, taking strength from the recent spike in Treasury yield and the expected increase in growth from higher U.S. fiscal stimulus.
US President Joe Biden, who will take office on January 20 with Democrats able to control both houses of Congress, has pledged “trillions” in additional pandemic relief spending.
Normally, the extra spending plans would make investors worried about rising inflation and its negative impact on the U.S. dollar in a weak economy, but the frontier currency has gained support in recent weeks as as a result of rising U.S. output.
U.S. government bond yields have recorded significant movements in recent sessions, with the Treasury yield curve seeing a sharp increase in yields in longer bonds.
Treasury yields rose to 10-month highs on Monday as investors charged for higher government spending under Joe Biden’s new administration and before the Treasury sold new long-term supplies.
At 99 basis points, the spread between the 2-year and 10-year Treasury yields is at its steepest since July 2017.
The U.S. dollar index was 0.4% higher at 90.636, the fourth session of direct gains. The index fell as low as 89.21 last weak, the weakest level since March 2018.
“Recent drivers of USD softness – rising commodities, stronger stocks and lower yields are modeling at least but whether or not we are seeing a wholesale reversal in these trends remains to be seen,” Shaun Osborne, chief financial strategist at Scotiabank, said in a note.
“While the USD may appeal against a change in position or take profit after its recent weakness, a sustained recovery must be accompanied by a clear development in recent output trends or a positive U.S. growth shock. , ”Said Osborne.
Speculators in the FX market are still very bearish on the dollar, U.S. Commodity Futures Trading Commission data showed on Friday.
The stronger dollar took hold of the pound, with the British currency down 0.7%, as Britain ‘s chief medical adviser warned that the coming weeks of the pandemic were the worst yet.
Meanwhile, bitcoin fell nearly 20% to a week-low low on Monday before losing paring, setting the cryptocurrency on the path for the biggest one-day fall since March as the red- his recent hot.
Reciting with Saqib Iqbal Ahmed; Edited by Andrew Heavens