SINGAPORE: The dollar regained some ground on Tuesday and hovered near a one-week high against major peers, while bitcoin extended its momentum on optimism that US regulators could soon approve exchange-traded spot bitcoin funds.
The greenback rose marginally against the yen in early Asia trade to 147.23, helped by a slowdown in core consumer inflation in Tokyo that put downward pressure on the Japanese currency.
The euro, meanwhile, languished near a three-week low hit on Monday and last traded US$1.0840, while the dollar index stood near a more than one-week high and was last at 103.59.
Analysts say the greenback’s move higher was in part due to a reversal of its heavy selloff in recent weeks, which saw the dollar index falling some 3% in November, its steepest monthly decline in a year.
“I think it’s maybe just a little bit of a reassessment as to the US dollar having fallen too far, and too fast,” said Sean Callow, a senior currency strategist at Westpac.
A slew of US economic indicators due this week, including November’s non-manufacturing ISM figures out later on Tuesday and the closely-watched nonfarm payrolls report at the end of the week, will provide further clarity on the future path of interest rates. Traders have all but priced in a rate cut from the Federal Reserve by the first half of next year.
“The Fed will be reactive to the hard data and not anticipatory of it. So as long as the activity data deteriorates and inflation retreats, convergence toward lower yields will resume,” said Thierry Wizman, Macquarie’s global FX and interest rates strategist.
Elsewhere, sterling rose 0.08% to US$1.2642, but was some distance away from its recent three-month high, while the New Zealand dollar similarly edged away from a four-month high and last traded US$0.6173.
The Australian dollar steadied at US$0.6620 ahead of a rate decision from the Reserve Bank of Australia later on Tuesday, amid expectations the central bank will keep rates on hold.
In cryptocurrencies, bitcoin last stood at US$41,873, not far from the previous session’s peak of US$42,404, its highest level since April 2022.
The world’s largest cryptocurrency has charged roughly 153% higher this year on US rate cut expectations and bets that American regulators will soon approve exchange-traded spot bitcoin funds (ETFs), opening the bitcoin market to millions more investors.
“US$40,000 has acted like a magnet since Bitcoin finally broke through US$30,000 in late October. It was only a matter of time before the next round number succumbed as enthusiasm about a spot ETF reaches fever pitch,” said crypto-services firm Nexo co-founder Antoni Trenchev.