Dollar hangs near 4-month lows, bitcoin rebounds

imageEconomy41 minutes ago (May 24, 2021 11:10AM ET)

(C) Reuters. FILE PHOTO: Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

By David Henry and Iain Withers

NEW YORK/LONDON (Reuters) – The dollar languished near four-month lows against major currencies on Monday as bets on a robust global economic recovery continued to support currencies seen as riskier.

The dollar index moved around the 90 mark, down 0.2% on the day in morning trading in New York, slightly above a four-month low on Friday of 89.646.

Since the end of March, the greenback, seen as a safe-haven trade, has retreated steadily with optimism about the global economic recovery. But lately that move down seems to have slowed as traders begin to anticipate higher U.S. interest rates coming when the U.S. Federal Reserves reacts to signs of increasing inflation.

“Markets have to start pricing in a slightly more hawkish Fed going forward,” Win Thin, global head of currency strategy at Brown Brothers Harriman wrote on Monday morning.

Data due on Friday, including U.S. personal consumption and inflation figures, could move the markets to anticipate a more hawkish tone from the next Fed policy meeting on June 15-16. But for now, Thin said, “the dollar is coming under some modest pressure as the week begins.”

Yields on benchmark 10-year U.S. Treasury notes were steady around 1.60% on Monday morning.

Traders are also watching for progress on a new stimulus package in the United States, after the White House pared down its infrastructure bill to $1.7 trillion on Friday but failed to gain Senate Republican backing.

Among the currencies gaining on the dollar was the euro, up 0.3% to $1.222 The single currency has gained around 4% on the greenback since March as Europe has moved to catch up with the United States in vaccinating its people and reviving its economy.

Cryptocurrencies fought back on Monday, retaking ground lost during a bout of weekend selling that was fueled by further signs of a Chinese crackdown on the emerging sector.

Bitcoin rebounded 9% to $37,729, but was still down after crashing in recent days, falling as much as 17% to $31,107 on Sunday.

Bitcoin halved in value just weeks after April’s record peak of $64,895, undermining the case for its mainstream acceptance.

The catalyst for Sunday’s slump was that cryptocurrency “miners,” who mint cryptocurrencies by using powerful computers to solve complex math puzzles, were halting Chinese operations in the face of increasing scrutiny from authorities.

Ether, the second-largest cryptocurrency, rose 16% to $2,435, about half of its high two weeks ago.

Dollar hangs near 4-month lows, bitcoin rebounds

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