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The dollar traded near a one-month low against its major currencies on Monday, and Treasury yields hovered around a five-week low after the US Federal Reserve reaffirmed its view that any spike in inflation is likely to be temporary.
The dollar, viewed as a safe haven, was also constrained by improved sentiment for risky assets amid rising global stock indices to record highs.
Bitcoin has suffered losses since Sunday when it fell 14% to $ 51,541. It last traded around $ 57,020.
The dollar index, which tracks the currency against six peers, stood at 91.623, close to last week’s low of 91.484, a level not seen since March 18.
The dollar was bought at 108.655 yen, the lowest since March 24.
The euro exchange rate changed hands at $ 1.1958, which is the highest level since March 4.
“The fixed income market will dominate my world this week” with risk currently biased towards further declines in US yields, weighing on the dollar, “wrote Chris Weston, head of research at Pepperstone Markets Ltd, foreign exchange broker from Melbourne in a note to clients.
Wall Street’s rise amid low volatility should keep the dollar from strengthening and attract new dollar sellers, “he wrote.
According to Weston, the yield on 10-year bonds could fall to 1.47% from 1.57% now.
According to him, the key technical points are 91.30, March 18 low, for the dollar index and $ 1.2000 for the euro, which could trigger an increase to $ 1.22.
The yield on 10-year Treasuries fell to 1.5280% last week from more than an annual high of 1.7760% late last month, dampening the dollar’s appeal.
The S&P 500 closed at an all-time high on Friday, continuing the rally in global stocks. The broadest indicator of world stocks, MSCI World, held on Monday near its historic high on Friday.
Fed chief Christopher Waller told CNBC on Friday that the US economy is “poised to rupture” as vaccinations continue and activity picks up, but inflation is likely to be temporary, echoing comments from other Fed officials, including Chairman Jerome Powell, about consumer spending. prices last week.
Net short dollar positions fell last week to their lowest level since June 2018, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday.
Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, considers the current quarter to be a period of consolidation in US and dollar yields, while Treasury yields may fall below 1.5% and the dollar below 108 yen.
According to Yamamoto, President Joe Biden’s outline for infrastructure spending has already been taken into account, and progress in negotiations will be limited in the near future.
But the upward trend in yields and the US dollar will resume in the third quarter, when Congress is likely to approve the plan, vaccinations achieve some success, and market speculation about Fed stimulus cuts will pick up, he said.
Bitcoin on Monday remained well below its all-time high of $ 64,895.22 hit April 14 after falling over the weekend.
Data website CoinMarketCap cited a power outage in China’s Xinjiang region, which is reportedly the source of Bitcoin mining, due to Sunday’s sale.
Analysts at National Australia Bank cited “speculation in several online reports” that the US Treasury may take action to combat digital currency laundering, explaining the sharp decline.
The Bitcoin debacle also followed the decision on Friday by the Turkish Central Bank to ban the use of cryptocurrencies for purchases.
Despite recent weakness, the world’s most popular cryptocurrency is still growing 97% in 2021 after more than quadrupling last year.
Mizuho’s Yamamoto also pointed to regulatory concerns as a likely trigger for the weekend sell-off, but does not expect these worries to stall growth in the long term.
“I would say that the bigger trend for bitcoin is the increased use by large financial institutions and corporations like Tesla,” he said. “I think a new record will be achieved in the coming weeks.”