Dollar index hits one-month low, bitcoin slides again
The dollar fell to a one-month low versus a basket of currencies on Thursday on a less upbeat U.S. growth outlook after the passage of major tax cuts, while bitcoin declined for a second day after South Korea stiffened rules on cryptocurrency trading.
Commodity-linked currencies including the Australian and New Zealand dollars posted two-month highs with copper prices
“The dollar had gained on expectations of tax reform. Now that it’s here, we are seeing it sold off,” said Sireen Harajli, currency strategist at Mizuho in New York.
Last week’s passage of the biggest overhaul of the U.S. tax code in 30 years gave the dollar some support, but markets are not confident that the tax reform will feed through quickly into increased consumer confidence.
An index which tracks the greenback against six major currencies slipped nearly half a percent on Thursday to its weakest since Nov. 27 <.DXY>. It was last down 0.45 percent at 92.609.
The dollar index has dropped more than 9 percent this year, putting it on track for its biggest annual slide since 2003 <.DXY>. The greenback hit its strongest in 14 years at the start of 2017 on hopes that U.S. President Donald Trump would implement pro-growth, pro-inflation measures.
But it has fallen on worries that Trump would not succeed in implementing other programs he campaigned on, in particular infrastructure, and as other countries’ central banks have moved towards tightening monetary conditions, lessening the divergence between their policies and that of the Federal Reserve.
The euro rose 0.55 percent to $1.1951 after touching its highest in a month. It has gained about 14 percent so far this year, setting up for its best annual performance since 2003.
The Australian dollar rose 0.32 percent to $0.7791, while the New Zealand dollar was up 0.33 percent at $0.7081.
Bitcoin, the biggest and best-known cryptocurrency, has dwarfed any gains in traditional assets this year, with a 1,300 percent gain. But since hitting record highs near $20,000 11 days ago, it has fallen on profit-taking, market observers said.
“Professional people are taking money off the table and retail has followed,” said Alexander Kravets, co-founder and chief executive at New York-based XTRADE.IO.
Investors reduced their bitcoin exposure further after South Korea said on Thursday it would impose additional measures to regulate speculation in cryptocurrency trading.
Bitcoin was last down 9.31 percent at $13,891.30
(Additional reporting by Jemima Kelly in London, Masayuki Kitano in Singapore; Editing by Phil Berlowitz and Chizu Nomiyama)
By Richard Leong