By Gina Lee
Investing.com – The dollar was down on Tuesday morning in Asia, hovering near its lowest level in a week as doubts began to creep in about a recent rally fueled by hopes of a faster U.S. economic recovery from COVID-19 than elsewhere.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.08% to 90.868 by 8:32 PM ET (1:32 AM GMT).
The USD/JPY pair inched down 0.08% to 105.14. The dollar remained mostly flat against the yen, after climbing to 105.765 at the end of the previous week for the first time since October 2020.
The dollar index has hovered near the 91 mark after Friday’s disappointing U.S. jobs report, knocked the wind out of a two-week rally that saw the index climb up to 91.6. A faster vaccine rollout in the U.S. comparative to other areas, as well as moves to fast-track the $1.9 trillion stimulus package proposed by President Joe Biden, also saw investors turn to the greenback.
However, there are worries that huge fiscal spending, alongside the continuous ultra-easy Federal Reserve monetary policy, could see the dollar decline in the long term.
“The bottom line is a large stimulus is highly likely to pass soon, exacerbating the widening in the U.S. current account deficit, and weighing on the USD,” Commonwealth Bank of Australia (OTC:CMWAY) currency analyst Joseph Capurso said in a note.
Europe’s “lagging” vaccination program will cap the euro in the short term, but the continent should catch up by the summer, after which the single currency could rally to $1.28 for the first time since 2014, the note added.
The euro was little changed in early Asian trading on Tuesday but was up from the two-month low touched on Friday.
Meanwhile, Tesla Inc. (NASDAQ:TSLA) said that it had bought $1.5 billion worth of bitcoins as part of a broad investment policy, and that it expected to begin accepting the digital asset as payment for its products “in the near future.” The statement sent the cryptocurrency soaring to a new record level of $47,565.86 on Tuesday, with rival cryptocurrency ethereum also reaching its own record level of $1,784.85 the day before.
“This is a turning point for how we view digital currencies … from here on, bitcoin will be genuinely considered as an asset available for selection by asset managers in their portfolios,” IG Securities foreign-exchange strategist Junichi Ishikawa told Reuters.Leave a comment