Dollar pulls back on US recovery doubts, Bitcoin tops $ 47,000 for the first time – Business

Kevin Buckland

Tokyo, Japan ●
Tue, February 9, 2021

Dollar, usa, bitcoin, economy, currency, pandemic, recovery

The dollar fell to its lowest level in a week on Tuesday as investors cast doubt on the magnitude of a recent rally driven by expectations of a faster pandemic recovery in the US than elsewhere.

The main focus continued to be on Bitcoin, which hit a record high of over $ 47,000 and built on a nearly 20 percent increase overnight, the largest since 2017 after Tesla invested $ 1.5 billion in the announced digital asset.

The dollar index fell 0.2 percent to 90.75 in the Asian session and fell to 90.963 for the first time since February 1.

The US currency has been on the decline since Friday when disappointing job data pushed the wind out of a two-week run that lifted it to a more than two-month high of 91.6.

Investors had pushed the greenback higher thanks to a faster adoption of U.S. vaccines than most other countries, and when the Democrats accelerated President Joe Biden’s $ 1.9 trillion COVID-19 aid package.

However, many analysts see that massive budget expenditures combined with the continued extremely simple monetary policy of the Federal Reserve will weigh on the dollar in the longer term.

“The bottom line is that a major incentive is likely to wane soon, exacerbating the widening US current account deficit and weighing on the USD,” said Joseph Capurso, currency analyst with the Commonwealth Bank of Australia, in a customer statement.

Europe’s “backward” vaccination program will cap the euro in the short term, but the continent should catch up by the summer, after which the single currency could climb back to $ 1.28 for the first time since 2014, he said.

The euro rose 0.2 percent on Tuesday to $ 1.20775 from a two-month low of $ 1.9520 on Friday.

The British pound renewed its highs since May 2018, rising to $ 1.3784 in Asia. Most recently it rose 0.3 percent to $ 1.3774.

The dollar fell 0.3 percent to 104.925 yen after rising to 105.765 late last week for the first time since October.

Elsewhere, Tesla announced in its 2020 annual report on Monday that the company had purchased $ 1.5 billion of the world’s most popular cryptocurrency as part of its comprehensive investment policy and is expected to begin accepting the digital asset as payment for its products “in the near future.”

“This is a turning point in our view of digital currencies,” said Junichi Ishikawa, foreign exchange strategist at IG Securities in Tokyo.

“From now on, Bitcoin will really be seen as an asset available to asset managers to choose from in their portfolios.”

Bitcoin was trading at $ 46,400 after hitting a new record at $ 47,565.86 on Tuesday.

Rival virtual currency Ethereum changed hands at $ 1,733.14 after hitting an unprecedented level of $ 1,784.85 on Monday.

Riskier fiat currencies also received a boost as rising equity markets boosted sentiment.

The Australian dollar gained 0.3 percent to 77.252 US cents, while the New Zealand peer rose 0.4 percent to 72.47 US cents.

Westpac is aiming for an advance of 75 US cents for New Zealand’s currency, wrote strategist Imre Speizer in a customer announcement published on Tuesday.

“Markets have recognized New Zealand’s successful Covid management and the ensuing economic recovery, but the latest economic data has surprised even the most optimistic experts,” the statement said.

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