Dollar stabilises following a sharp selloff in November

5 Dec 2023 , 09:36 AM

Tuesday saw the dollar recover some ground against its main counterparts and stay close to a one-week high, while bitcoin continued to rise on hopes that exchange-traded spot bitcoin funds will soon be approved by US regulators.

In early Asia trade, the US dollar slightly strengthened vs the yen to 147.23, supported by Tokyo’s core consumer inflation slowing down, which put downward pressure on the value of the Japanese yen.

In contrast, the dollar index hovered around a more than one-week high, closing at 103.59. The euro, on the other hand, continued to linger close to a three-week low that was reached on Monday, trading at $1.0840 yesterday.

Analysts speculate that the dollar’s recent strong selloff, which saw the dollar index drop by about 3% in November—its biggest monthly dip in a year—was partially responsible for the greenback’s current upswing.

There will be more clarity on the future course of interest rates provided by a number of U.S. economic data that are due this week, including the highly anticipated nonfarm payrolls report at the end of the week and November’s non-manufacturing ISM figures out later on Tuesday. By the first half of next year, traders have essentially priced in a rate cut from the Federal Reserve.

In other news, the New Zealand dollar also retreated from a four-month high, closing at $0.6173, while sterling increased 0.08% to $1.2642, still a long way from its most recent three-month high.

Before the Reserve Bank of Australia’s rate decision later on Tuesday, the Australian dollar remained stable around $0.6620, with market participants anticipating a rate hike.

Bitcoin’s most recent price was $41,873, not too far off its top of $42,404 from the previous session—the highest since April 2022.

The largest cryptocurrency in the world has increased in price by almost 153% so far this year as a result of forecasts that US interest rates will drop and speculations that US regulators will soon legalise exchange-traded spot bitcoin funds (ETFs), which would allow millions more investors to access the bitcoin market.

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