The dollar started the week near two-week lows on Monday as traders asked if the recovery from the pandemic in the United States would come as soon as expected. Bitcoin traded below $ 49,000 after rising to a record high of $ 49,714.66 over the weekend after Tesla and BNY Mellon made recommendations last week.
The dollar index was at 90.427, close to last week’s low of 90.249 – a level not seen since January 27th. The meter hit a two-month high of 91.6 on Feb.5 in hopes that a US recovery would outperform other major economies. but has since pulled back amid disappointing employment data. “The dollar’s recovery … was triggered by the US’s relative economic outperformance or expectations,” said Shinichiro Kadota, senior currency strategist at Barclays Capital in Tokyo.
“Now the market is looking for real evidence that the US economy is outperforming.” “Economic data needs to be improved,” he said.
The euro has barely changed at $ 1.21215 after rising 0.6% last week. The dollar rose 0.2% to 105.09 yen, rebounding from a portion of its 0.4% loss the previous week. Many financial markets in Asia were closed for Lunar New Year on Monday, and the United States was also closed for Presidents Day. That year there was a tug-of-war over the direction of the dollar. Some market participants expected the dollar to strengthen as the US economy outperforms others like Europe.
Others see the US recovery as a major driver in a global reflation narrative that should raise riskier assets at the expense of the dollar. “The US outperformance story … can go much further thanks to financial incentives and faster vaccine delivery,” Westpac strategists wrote in a customer release. “But the persistently aggressive fiscal and monetary policy framework of US reflation will leave DXY on a sustained medium-term bear trend,” says the note on the dollar index. Bitcoin was last traded at $ 48,772, which is little changed from the record high. Last week it rose around 25% to get its best performance since the turn of the year.