NEW YORK (Reuters) – The dollar rebounded from levels not seen since March 2018 to its highest in a week on Thursday, on the potential for an economic rebound and profit-taking by investors who had been betting on the euro.
The dollar index , which measures the U.S. currency against a basket of peers, rose 0.581% at 89.835 after rising as high as 89.979 with the euro down 0.45% to $1.2269.
The dollar saw little movement on Wednesday as hundreds of President Donald Trump’s supporters stormed the U.S. Capitol on Wednesday in a bid to overturn his election defeat, battling police in the hallways and delaying the certification of Democratic President-elect Joe Biden’s victory for hours. [nL1N2JI0JO]
But the certification of Biden’s victory has raised expectations for more fiscal stimulus measures to bolster the economic outlook and pushed longer-dated bond yields higher, with the benchmark 10-year climbing above 1% on Wednesday for the first time since March.
“Once the rates start to move, as they did yesterday, it wasn’t a big move but it was in the right direction, that is the direction of the future,” said Joseph Trevisani, senior analyst at FXStreet.com.
“It’s debatable on how long it is going to take for the vaccines to work and hopefully end the pandemic but once that happens you are going to get a much stronger U.S. recovery and that will lead to a stronger dollar.”
Still, many analysts maintain a weaker long-term outlook for the dollar, and see the recent advance as the unwinding of bearish bets against the greenback, after it fell nearly 7% in 2020 and as much as 0.9% in the new year.
The yuan edged lower at 6.47 per dollar CNH=EBS after Chinese authorities signaled a desire for a slower pace of gains.
The remarks by the State Administration of Foreign Exchange (SAFE) on Wednesday follow an advance of around 10% on the greenback since last May as China’s economic rebound has led the world’s pandemic recovery.
Sterling was last trading at $1.3562, down 0.33% on the day as it continued to meander below the almost three-year high of $1.3703 touched on Monday.
Bitcoin marked a fresh all-time high as it approached the $40,000 mark on Thursday, and was last up 6.56% at $39,266.00.
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