* Dollar at two-week lows
* Sterling crosses $1.38
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Ritvik Carvalho
LONDON, (Reuters) - The dollar wallowed near two-week lows
on Wednesday as demand for safer assets ebbed, while Sweden's
crown hit its highest levels in a month against the euro.
Bitcoin BTC=BTSP consolidated around $46,500 after
reaching a new high of $48,216 overnight following Tesla's
disclosure of a $1.5 billion investment in the leading
cryptocurrency. Rival virtual currency ethereum, which often moves in tandem
with bitcoin, reached a record $1,826 on Wednesday before
pulling back slightly. It was trading 1.1% higher at $1,791.
Sweden's crown strengthened to a two-month high of 10.0405
crowns per euro ahead of the Swedish central bank's interest
rate decision, paring some of those gains after the bank kept
monetary policy unchanged on Wednesday as expected. The dollar index =USD drifted to a two-week low of 90.299
on Wednesday for the first time this month and set for a third
day of losses.
Traditionally viewed as a safe-haven, the dollar has sunk
against major peers as optimism over monetary and fiscal
support, robust corporate earnings and coronavirus vaccines
bolstered risk sentiment.
U.S. consumer price inflation numbers for January are due at
1330 GMT, and along with a speech by Federal Reserve Chair
Jerome Powell will be key events for the future direction of the
dollar.
"The mix of clear upside price pressures, the risk of an
overshoot and CPI staying higher for longer, along with a
cautious Fed sticking to its Average Inflation Targeting
framework to make up for past inflation undershoots, should lead
to a lower USD as U.S. real rates remain deeply negative," said
ING strategists in a note to clients.
There has been a tug-of-war among traders over the impact on
the dollar of President Joe Biden's planned $1.9 trillion fiscal
stimulus package.
On one hand, it is expected to speed a U.S. recovery
relative to other countries, bolstering the currency. But on the
other, it is a major driver in a global reflation narrative that
should lift riskier assets at the dollar's expense.
After a strong start to the year for the greenback, the
latter view appears to be regaining sway with last week's U.S.
jobs data providing the turning point, according to Westpac
analysts.
"Friday's disappointing payrolls completely flattened the
USD, that data point casting doubt on the budding U.S.
outperformance narrative and refocusing minds on the prospect
for sustained reflationary U.S. fiscal and monetary policy,"
they wrote in a client note on Wednesday.
"Nursing eye-catching losses, a test of 90 on the cards in
coming days," the note said, referring to the dollar index.
The dollar lost 0.1% to 104.42 yen JPY=EBS , with the
Japanese currency hitting its highest against the greenback
since Jan. 29.
The euro EUR=EBS edged up to $1.2142, adding to a
three-day gain and hitting its highest since the start of
February.
The British pound GBP= set fresh three-year highs of
$1.3853.
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