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Dollar recovers after November selloff


Sterling gained 0.08 per cent to $1.2642, while the New Zealand dollar similarly dropped from a four-month high and last traded $0.6173

The dollar regained some ground on Tuesday and hovered near a one-week high against major peers, while bitcoin extended its momentum on hopes that U.S. regulators could soon approve spot bitcoin ETFs.

The dollar increased slightly against the yen in early Asia trade to 147.23, helped by a slowdown in core consumer inflation in Tokyo that put downward pressure on the Japanese currency.

The euro languished near a three-week low hit on Monday and traded at $1.0840, while the dollar index stood near a more than one-week high and stood at 103.59 at one point.

Analysts say the greenback’s move higher was partly because of a reversal of its heavy selloff in recent weeks, which saw the dollar index dropping around 3 per cent in November, its sharpest monthly decline in a year.

I think it is maybe just a little bit of a re-evaluation as to the U.S. dollar having dropped too far, and too quick, said Sean Callow, a senior currency strategist at Westpac.

A string of U.S. economic indicators due this week, including November’s non-manufacturing ISM figures out later on Tuesday and the nonfarm payrolls report at the end of the week, will provide further clarity on the future path of interest rates. Traders have all but priced in a rate cut from the Fed by the first half of 2024.

The Fed will be reactive to the hard data and not anticipatory of it. So as long as the activity data deteriorates and inflation drops, convergence toward lower yields will resume, said Thierry Wizman, Macquarie’s global FX and interest rates strategist.

Elsewhere, sterling gained 0.08 per cent to $1.2642, while the New Zealand dollar similarly dropped from a four-month high and last traded $0.6173.

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