* Dollar index falls to two-week low
* Yen, euro, sterling strengthen against dollar
* Bitcoin soars to fresh record high
* Graphic: World FX rates tmsnrt.rs/2RBWI5E
(New throughout, updates prices, market activity and comments)
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 9 (Reuters) - The dollar fell to two-week lows on Tuesday in choppy trading, led by losses
against the yen and euro, as risk sentiment improved in the afternoon session amid stock market gains and as
U.S. Treasury yields rose.
Bitcoin soared to a record high, headed toward the $50,000 milestone. It has surged more than
1,000% since March 2020 and analysts said forecasts of bitcoin hitting $100,000 this year no longer seem
far-fetched.
Shares on Wall Street traded higher in the afternoon. Treasury yields rose from their lows as the dollar
extended its losses
"The FX market has been taking some of its cue from the equity market," said Simon Harvey, senior FX
market analyst at Monex Europe in London.
"There are heightened expectations that the actual stimulus package would be higher than expected. The
Biden administration is going through reconciliation which means a less timely release of stimulus but a
larger package," he added.
The dollar has risen as Democrats in the U.S. Congress moved to fast-track President Joe Biden's $1.9
trillion COVID-19 relief package. But some analysts say massive fiscal spending and continued ultra-easy
Federal Reserve monetary policy will ultimately be a broad headwind for the dollar.
U.S. benchmark 10-year U.S. Treasury yields rose to near March 2020 highs on Monday as
investors bet on a faster economic recovery than many of peers. U.S. 10-year yields were last 1.16%.
The dollar index was 0.6% lower at 90.54, after earlier hitting a two-week low.
Disappointing U.S. jobs data on Friday knocked the wind out of a two-week run that had lifted the dollar
to a more than two-month high of 91.60.
Shaun Osborne, chief FX strategist, at Scotiabank in Toronto said dollar losses at this point were a
little premature, "especially as positioning indicators suggest that active traders continue to reduce what
remains a fairly significant U.S. dollar short exposure."
BLISTERING BITCOIN
Cryptocurrencies were the biggest beneficiary of the weakening dollar. Bitcoin rocketed above
$48,000, building on a nearly 20% surge overnight after Tesla Inc announced a $1.5 billion
investment in the digital asset.
The Japanese yen was another major beneficiary, rising 0.6% against the U.S. dollar to 104.69
yen. Earlier, the dollar fell to a two-week low of 104.50 yen.
The yen has become increasingly correlated with outright yields rather than an indicator of broad risk
sentiment. A 90-day rolling correlation between yen and U.S. yields has strengthened considerably since the
final quarter of 2020.
Elsewhere, the euro rose 0.5% to $1.2104 on Tuesday, up from a two-month low of $1.1952
touched Friday.
The British pound climbed to $1.3816, its highest since May 2018. It last traded up 0.6% at
$1.3811.
========================================================
Currency bid prices at 3:29PM (2029 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 90.4480 90.9530 -0.54% 0.519% +90.9630 +90.4270
Euro/Dollar $1.2117 $1.2050 +0.56% -0.82% +$1.2121 +$1.2049
Dollar/Yen 104.5650 105.2100 -0.60% +1.24% +105.2550 +104.5100
Euro/Yen 126.70 126.78 -0.06% -0.17% +126.8400 +126.4400
Dollar/Swiss 0.8923 0.8989 -0.73% +0.86% +0.8990 +0.8920
Sterling/Dollar $1.3810 $1.3742 +0.52% +1.11% +$1.3816 +$1.3739
Dollar/Canadian 1.2700 1.2740 -0.31% -0.26% +1.2766 +1.2695
Aussie/Dollar $0.7736 $0.7704 +0.42% +0.57% +$0.7740 +$0.7701
Euro/Swiss 1.0812 1.0829 -0.16% +0.03% +1.0833 +1.0805
Euro/Sterling 0.8771 0.8769 +0.02% -1.85% +0.8798 +0.8763
NZ $0.7237 $0.7220 +0.26% +0.81% +$0.7254 +$0.7216
Dollar/Dollar
Dollar/Norway 8.4445 8.5205 -0.88% -1.65% +8.5000 +8.4455
Euro/Norway 10.2348 10.2550 -0.20% -2.23% +10.2725 +10.2320
Dollar/Sweden 8.3191 8.3870 -0.17% +1.50% +8.3962 +8.3170
Euro/Sweden 10.0809 10.0983 -0.17% +0.04% +10.1255 +10.0780
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Edmund Blair and David Gregorio)
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