FOREX-Dollar steadies on U.S. recovery hopes, Bitcoin near record $52,640

* Dollar trades below 10-day high
* Euro consolidates above $1.20
* Sterling trades above $1.39
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, Feb 18 (Reuters) - The dollar traded shy of recent
highs on Thursday after its first back-to-back gains in two
weeks as upbeat data bolstered expectations that the U.S.
economy would recover from the coronavirus pandemic faster than
that of most of its peers.
Bitcoin BTC=BTSP traded close to the record high of
$52,640 reached overnight, with its roughly 58% surge this month
prompting some analysts to warn that the rally might be
unsustainable. Government stimulus cheques helped U.S. retail sales rebound
in January, while industrial output and producer prices data
also provided upside surprises. Investors expect a further boost from President Joe Biden's
proposed $1.9 trillion COVID-19 relief package, with the
president meeting top labour leaders on Wednesday to drum up
support for the plan. Meanwhile, minutes from the Federal Reserve's policy meeting
last month reinforced the central bank's willingness to let the
economy run hot while keeping monetary settings
ultra-accommodative. "As we have seen over recent weeks, the dollar has become
increasingly cyclical as there is now a link to the pricing of
Fed and expected tapering and probably too, that with volatility
indices generally low we also have more room to focus on smaller
relative differences and cross-asset correlations have come
down," said Mikael Milhøj, senior analyst at Danske Bank.
"Either way, retail sales was a good event study to underpin
our view of U.S. outperformance in H2 can support dollar. This
is unlike last year, where positive surprises would always be
dollar-negative, no matter the origin as it removed deflation
risks."
The dollar index =USD was off 0.2% at 90.675 on Thursday
in morning trade in London after strengthening 0.2% overnight
and 0.4% on Tuesday.
The gauge has gained about 1% this year, rebounding from an
almost 7% slide in 2020 that extended to a two-and-a-half-year
low of 89.206 in early January.
"Market conviction in the weaker dollar has wavered as US
yields have risen, with net short positions coming off in recent
weeks. But we don't think the rise in yields will prevent a
longer-term decline in the U.S. currency," said strategists at
UBS Global Wealth Management in a note to clients.
"The dollar remains the most expensive currency we track
within the G10, and mounting twin deficits amid generous fiscal
spending will reduce its appeal. We think the reflation trade
will likely send commodity-linked currencies higher, thanks both
to increased demand and also on risk sentiment, with our
favoured currencies forecast to average mid-single digit
appreciation by year-end."
The euro EUR=EBS gained 0.2% to $1.2065 after sliding 0.5%
overnight, the most in two weeks.
The dollar was almost flat at 105.735 yen JPY=EBS ,
following a pullback Wednesday after reaching a five-month high
of 106.225.
Sterling traded above $1.39 against the dollar GBP=D3 and
hit a high against the euro of 86.70 pence EURGBP=D3 . The
pound is the best-performing G10 currency against the dollar
this year. GBP/

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World FX rates https://tmsnrt.rs/2RBWI5E
Reflation trade's big FX winner: GBP https://tmsnrt.rs/3auhcJE
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