Written by Kevin Buckland
TOKYO (Reuters) – The dollar narrowed on Monday, weighed down by lower U.S. Treasury yields, as traders awaited more important economic data for new clues on when the Federal Reserve will cut interest rates. It remained within a range.
Bitcoin has soared to its highest level in more than two years on the back of large inflows into crypto exchange-traded funds (ETFs).
The euro firmed following Friday’s 0.33% gain as the European Central Bank’s policy decision looms on Thursday.
As investors tried to determine whether the Bank of Japan’s negative interest rate policy would be lifted by the end of this month, the yen was closely watched, with the yen hovering around the 150 yen level.
The dollar index, which measures the dollar against six major currencies including the euro and yen, was little changed at 103.85 as of 0530 GMT, moving in a narrow range at the bottom half of last month’s range of 103.43-104.97.
The index fell 0.26% on Friday after some weaker data on manufacturing and construction spending.
This also weighed on U.S. Treasury yields, removing further support for the dollar and sending the benchmark 10-year Treasury yield down to 4.178% for the first time in two weeks. The yield was about 4.2% as of Monday.
“The bias appears to be toward testing range support” ahead of this week’s major macro policy announcements and Federal Reserve Chairman Jerome Powell’s testimony to Congress, Westpac strategists said in a note to clients.
The note said that to keep the dollar index within its current range, “the market would need a significant change in the data for range support to suggest anything other than a new buying opportunity.” Probably.”
This week, the ISM statistics for manufacturing and services will be released on Tuesday, followed by the main event: monthly payroll statistics on Friday.
Meanwhile, traders appreciated Bank of Japan Governor Kazuo Ueda’s cautious comments late last week that it was too early to conclude that the Bank of Japan’s inflation target was close to being achieved, with the dollar trading 0.1%. The price rose to 150.28 yen.
This was in contrast to the hawkish remarks of Bank of Japan board member Hajime Takada earlier in the day, which caused the yen to soar to 149.21 yen to the dollar, its highest level in more than two weeks.
Markets are considering whether the Bank of Japan will end its negative interest rate policy at its March 18-19 meeting or wait until April or later.
Policymakers have repeatedly stressed the need for continued wage increases, and the outcome of crucial spring pay negotiations for Japan’s biggest companies will be known on March 13.
“The March meeting will be broadcast live,” said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
Regarding the timing of an exit from stimulus, he said: “I’m not saying it’s likely (to raise interest rates), but the Bank of Japan is now more flexible.”
“The Spring East results are likely to be positive, and if the U.S. data is strong, it would be a very good time to move forward.”
Elsewhere, the euro was little changed at $1.08435, near the top of its recent range.
Most economists expect the ECB to first cut interest rates at its June meeting, but will be hoping for further clues about the timing at a press conference from central bank governor Christine Lagarde.
The pound rose 0.08% to $1.2663.
Bitcoin was trading at $63,350, up about 1.2% from Sunday, before hitting $64,284.75, its highest since November 2021, when it hit a record high of $68,999.99. It was the same month that I added it.
The largest cryptocurrency by market capitalization is up 50% this year, with much of that gain coming in the past few weeks as trading volumes for U.S.-listed Bitcoin funds surged following approval earlier this year. It is.
“If you look at the Bitcoin futures chart, you can see that the market is tired, with no appetite for reaching $69,000 at this point,” said Matt Simpson, senior market analyst at City Index.
“I’m not saying this is a market to short, but I would be wary of going long at this high.”
(Reporting by Kevin Buckland; Additional reporting by Uncle Banerjee; Editing by Jacqueline Wong and Michael Perry)