The U.S. dollar slipped on Monday as investors awaited crucial economic data and clues from the Federal Reserve regarding interest rate cuts. Meanwhile, Bitcoin gained ground, climbing above its 2-year high at $68,999.99 amid surging inflows into cryptocurrency exchange-traded funds.
The Euro remained steady following a 0.33% rise on Friday, with the European Central Bank set to announce a policy decision on Thursday.
The Japanese yen hovered around the significant threshold of 150 per dollar against investor speculation regarding the Bank of Japan's decision to abandon its negative interest rate policy.
The U.S. Dollar Index, which compares the value of the U.S. dollar against six major currencies, such as the Euro and yen, experienced a slight decrease of 0.07% to reach 103.79 in early Asian trade sessions. It remained near the lower end of its recent price range.
Decreased support from Treasury yields also weighed on the dollar following a decline in the benchmark 10-year yield to 4.178%, the lowest level in two weeks. Approximately 4.19% was the level of the yield on Monday.
Market analysis and outlook
Westpac strategists mentioned in a client note that the bias is moving toward testing range support. Still, markets would need significant changes in data for the support to be anything other than another buying opportunity.
However, markets will need a major shift in data to suggest that range support will be anything other than another buying opportunity
Westpac strategists
This coming week, several significant macroeconomic reports are scheduled for release, including the ISM indices for manufacturing and services on the third day and the monthly employment data on the last day.
As investors evaluated Kazuo Ueda's comments on the Bank of Japan's potential achievement of its inflation goal, the Japanese yen depreciated 0.09% versus the U.S. dollar and was valued at 149.99. The timing of the decision by the Bank of Japan to terminate its negative interest rate policy remains uncertain in financial markets, and some analysts predict this may occur during their March gathering.
The previous day's strong performance kept the Euro close to $1.08425 against the U.S. dollar, just shy of its latest high.
While economists widely anticipate a rate reduction at the European Central Bank's June meeting, their attention remains fixed on President Lagarde's forthcoming press conference. Analysts eagerly await any supplementary insights she may offer, recognizing the potential impact of her statements on market dynamics and monetary policy expectations.
FX markets are - once again - operating with an abundance of caution ahead of lots of new info this week
Helen Given
Bitcoin's resurgence and updates
Bitcoin's value increased by around 1.5% compared to the previous Sunday, peaking at $64,284.75 since November 2021. In the same month, it marked its all-time high of $68,999.99.
As the top cryptocurrency in market capitalization, it has recorded a 50% increase in value during the current year, with much of this growth occurring in the last few weeks. This notable uptick can be linked to the recent approvals of US-listed Bitcoin funds, which have led to a surge in trading volume.
When I look at the Bitcoin futures chart, I see a tired market that doesn't really have the drive to get to $69,000 right now
Matt Simpson
According to Matt Simpson, a senior market analyst at City Index, Bitcoin's recent price movements indicate a possible fatigue in the market, particularly evident in its failed attempt to surpass its previous all-time high.
Investors are keenly observing key global events, including Federal Reserve Chair Jerome Powell's congressional testimony and the European Central Bank policy meeting, as they seek clues about potential interest rate adjustments. These events hold significant weight in shaping market sentiments and influencing investment decisions.
For instance, the Securities and Exchange Board of India has given its nod to the initial public offerings (IPOs) of three businesses, among them being Go Digit, a modern-age insurance firm backed by cricketer Virat Kohli.