The U.S. dollar fell to a three and half week low against a basket of currencies on Wednesday as traders bet more major central banks will begin reducing monetary stimulus in 2018.
The U.S. dollar fell to a 3-1/2 week low against a basket of currencies on Wednesday as traders bet more major central banks will begin reducing monetary stimulus in 2018 because of faster global economic growth. In the cryptocurrency arena, Bitcoin’s rebound following its worst week since 2013 fizzled as it struggled to stay above $16,000 for a second day. “The dollar has taken quite a beating against the majors in 2017,” said Minh Trang, senior foreign currency trader at Silicon Valley Bank in Santa Clara, California. In holiday-thinned trading, an index that tracks the greenback against six currencies was down more than 0.2 percent at 93.027 after slipping to 92.956, its lowest since Dec. 1 earlier. The dollar index has fallen 9.0 percent this year, putting it on track for its steepest annual decline since 2003, when it dropped 14.7 percent. Conversely, the euro would have its best year against the greenback since 2003. The single currency reached a 3-1/2 week high of $1.1904 on Wednesday, Reuters data showed. The dollar weakened against the yen for a second straight year. It held steady on the day at 113.26 yen. Traders have shifted their focus from last week’s passage of the biggest U.S. tax overhaul in 30 years to central banks other than the U.S. Federal Reserve and whether they will reduce bond purchases or start raising interest rates next year, said Peter Chia, FX strategist for United Overseas Bank in Singapore. Bitcoin, down 4.31 percent at $15,055.13 on the Luxembourg-based Bitstamp exchange, struggled to rebound further after last week’s rout. The biggest and best-known digital currency briefly traded below $15,000. “Some people were nervous about it getting above $16,000 and began dumping it,” said Greg Adamsick, director of global futures and options at RCM Alternatives in Chicago. Meanwhile, oil prices surged to 2-1/2 year highs on Tuesday on news of an explosion on a Libyan crude pipeline and voluntary OPEC-led supply cuts. Copper prices on Wednesday rocketed to a four-year peak. Those developments bolstered demand for the currencies of commodity exporting countries, with the Canadian dollar touching C$1.2627, its strongest level in three weeks. The Australian dollar rose 0.6 percent to $0.7773, its highest level in two months.