* Dollar index falls to one-week low
* U.S. stimulus ignites deficit concerns, analyst says
* Yen, euro, sterling strengthen against dollar
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
(Adds new comments, FX table, bullets, updates prices, changes
byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 9 (Reuters) - The dollar fell to a one-week
low on Tuesday, as a slide in U.S. Treasury yields raised doubts
about the outlook for the greenback against the backdrop of a
looming U.S. fiscal stimulus package.
But Bitcoin BTC=BTSP soared to a new record high, on its
way toward another key milestone: $50,000. It has surged more
than 1,000% since March 2020 at the beginning of pandemic and
analysts said forecasts of bitcoin hitting $100,000 this year
doesn't seem far-fetched after all.
Market participants pushed up the dollar recently as
Democrats moved to fast-track President Joe Biden's $1.9
trillion COVID-19 relief package. But some analysts say massive
fiscal spending and continued ultra-easy Federal Reserve
monetary policy will ultimately prove to be a dollar headwind.
"Investors may be registering concerns that the fiscal
stimulus will boost the U.S. current account deficit and we
concur that structural imbalances remain a weakness in the
longer run outlook for the U.S. dollar, especially amid reduced
U.S. growth and yield differentials," said Shaun Osborne, chief
foreign exchange strategist, at Scotiabank in Toronto.
U.S. benchmark 10-year U.S. Treasury yields US10YT=RR
rose to near March 2020 highs on Monday as investors bet on a
broader reflationary theme in the financial markets. But it
slipped back to 1.14%, down 5 basis points from Monday's
session.
The dollar index .DXY was 0.4% lower at 90.58, after
earlier hitting a one-week low.
Disappointing U.S. jobs data on Friday knocked the wind out
of a two-week run that had lifted the dollar =USD to a more
than two-month high of 91.60.
Osborne said dollar losses at this point were a little
premature, "especially as positioning indicators suggest that
active traders continue to reduce what remains a fairly
significant U.S. dollar short exposure."
Tuesday raised familiar doubts among investors, with some
traders saying fresh fiscal stimulus along with record low U.S.
interest rates will weigh on the currency in the coming months.
"The reflation trade that boosted equities and caused the
30-year yield breach 2% has changed to worries that a quick
spike in inflation would be detrimental to risk and also the
dollar," said John Doyle, vice president of dealing and trading,
at Tempus Inc. in Washington.
BLISTERING BITCOIN
The biggest beneficiary of the weakening dollar was
cryptocurrencies with bitcoin BTC=BTSP rocketing above
$48,000, building on a nearly 20% surge overnight after Tesla
Inc TSLA.O announced a $1.5 billion investment in the digital
asset. The yen JPY=EBS was another major beneficiary, with the
Japanese unit rising 0.6% against the U.S. dollar to 104.69 yen.
The yen has become increasingly correlated with outright
yields rather than an indicator of broad risk sentiment. A
90-day rolling correlation between yen and U.S. yields has
strengthened considerably since the final quarter of 2020.
Elsewhere, the euro EUR=EBS rose 0.4% to $1.2096 on
Tuesday, up from a two-month low of $1.1952 touched Friday.
The British pound GBP=D3 revisited its highs since May
2018. It last traded up 0.4% at $1.3787.
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Currency bid prices at 10:18AM (1518 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 90.5860 90.9530 -0.39% 0.672% +90.9630 +90.5020
Euro/Dollar EUR=EBS $1.2096 $1.2050 +0.39% -0.99% +$1.2117 +$1.2049
Dollar/Yen JPY=D3 104.5300 105.2100 -0.48% +1.37% +105.2550 +104.5500
Euro/Yen EURJPY= 126.43 126.78 -0.28% -0.39% +126.8400 +126.4500
Dollar/Swiss CHF=EBS 0.8938 0.8989 -0.56% +1.03% +0.8990 +0.8930
Sterling/Dollar GBP=D3 $1.3792 $1.3742 +0.33% +0.92% +$1.3794 +$1.3739
Dollar/Canadian CAD=D3 1.2734 1.2740 -0.05% +0.00% +1.2766 +1.2714
Aussie/Dollar AUD=D3 $0.7714 $0.7704 +0.16% +0.31% +$0.7736 +$0.7701
Euro/Swiss EURCHF= 1.0812 1.0829 -0.16% +0.05% +1.0833 +1.0809
Euro/Sterling EURGBP= 0.8769 0.8769 +0.00% -1.89% +0.8798 +0.8763
NZ NZD=D3 $0.7225 $0.7220 +0.14% +0.68% +$0.7254 +$0.7216
Dollar/Dollar
Dollar/Norway NOK=D3 8.4775 8.5205 -0.53% -1.30% +8.5000 +8.4610
Euro/Norway EURNOK= 10.2551 10.2550 +0.00% -2.02% +10.2725 +10.2320
Dollar/Sweden SEK= 8.3381 8.3870 -0.12% +1.73% +8.3962 +8.3317
Euro/Sweden EURSEK= 10.0863 10.0983 -0.12% +0.10% +10.1255 +10.0780
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World FX rates https://tmsnrt.rs/2RBWI5E
USD-POSITIONS https://tmsnrt.rs/36UYmsX
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