According to Reuters “The U.S. dollar held near two-week lows on Monday, as optimism about COVID-19 vaccine rollouts and a planned $1.9 trillion U.S. stimulus package offered a boost to riskier currencies, stock markets and commodity prices”.
Among the weaker dollar and the gainers, we find that the British pound broke $1.39 for the first time in almost three years, backed by expectations that the success of UK’s coronavirus vaccination programme would enable the economy to open up and rebound. The offshore-traded Chinese yuan persists in its increase and was on the cusp of breaking above 6.39 per dollar for the first time since June 2018.
We also find that commodity currencies got stronger as well, with the South African rand touching a one-year high. The Australian dollar as well as the Norwegian crown reached their highest levels in three weeks against the greenback. As in Asia, we find that many financial markets remained closed on Monday for the Lunar New Year whilst the US stock market was shut for President Day.
The Yahoo Finance reports that “The dollar index slipped 0.1%, to close to last week’s low of 90.249 – a level unseen since Jan. 27. Analysts at MUFG said the dollar could weaken further if market optimism held”.
“We believe there is plenty yet to go in the so-called ‘reflation trade’ with market participants under-estimating the willingness of global policymakers to let the economy run hot and fuel stronger-than-expected global growth through the remainder of the year,” the analysts said in a note.
Speculators maintained their short dollar positions with a net share value standing at $29.63 billion as reported by the latest data from the U.S. Commodity Futures Trading Commission.
Taking a look at other currencies, we find that the Japanese yen slipped 0.4% against the greenback to 105.27 yen and the euro edged 0.1% higher to $1.21310, extending last week’s 0.6% advance.
Bitcoin remained volatile, retreating to as low as $45,914.75 a day after reaching a record-high $49,714.66.
The world’s most popular cryptocurrency rallied 25% last week, boosted by endorsements from Tesla and BNY Mellon.