LONDON: The dollar held above a 2018 low against other major currencies on Friday ahead of fresh US jobs data likely to give clues on the extent of fiscal stimulus needed to prop up the coronavirus-hit economy.
The greenback bounced off a nearly three-year low on Thursday as a rise in US yields triggered some unwinding of bearish bets on the currency, with traders taking profits against the euro in particular.
Democrats won effective control of the Senate this week, while chaos gripped Washington. Congressional Democrats on Friday weighed impeaching President Donald Trump for a second time after his false claims of election fraud helped encourage a mob that stormed the US Capitol.
The Democrats’ Senate seat wins give President-elect Joe Biden scope to push through more spending, which analysts predict will fuel risk appetite and be negative for bonds and the dollar.
“I think once this euphoria dies down, the dollar is likely to resume its downtrend trend, because I don’t think the Fed will be so eager to taper,” said Marshall Gittler, head of investment research at BDSwiss, in a note.
The dollar index dropped 7% in 2020 and as much as 0.9% in the first few days of the new year on expectations of US fiscal stimulus.
On Friday, the index was last up 0.1% at around the 90 mark, after its biggest increase in more than two months on Thursday. It remains on track for a weekly decline.
Several major currencies weakened against the dollar before regaining some ground, with the euro dipping to as much as 0.5% down at $1.22130, while the Japanese yen touched a fresh three-week low at 104.090. The euro was last down 0.2%, while the yen had recovered to flat.
Bitcoin hit a fresh all-time high, up more than 5% on the day, after smashing through $40,000 for the first time on Thursday.
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