FOREX-Dollar droops before key data, bitcoin soars above $57,000

Credit: REUTERS/Nguyen Huy Kham

By Kevin Buckland

TOKYO, Feb 27 (Reuters) - The dollar traded on the back foot on Tuesday, as markets looked ahead to a week of U.S. economic data that will provide fresh signals on how soon the Federal Reserve may begin cutting interest rates.

Leading cryptocurrency bitcoin soared to a more than two-year high above $57,000, helped by enterprise software firm MicroStrategy Inc'sMSTR.Oannouncementthat it had bought about 3,000 more of the tokens.

The yen was firmer after consumer inflation data topped estimates, reinforcing expectations that the Bank of Japan is still on track to exit negative rates as soon as next month.

Markets have all but ruled out a cut at the Fed's March meeting and have recently pushed back expectations for a cut to June from May, CME's FedWatch Tool showed, following strong U.S. consumer and producer price data.

U.S. durable goods data is due later on Tuesday, while January's U.S. personal consumption expenditures price index, which is the Fed's preferred measure of inflation, will be released on Thursday.

"A still softish DXY (dollar index) doesn't quite convey the USD's story right here ... and, if anything, key upcoming event risk can potentially fuel another leg up," Westpac's head of FX strategy, Richard Franulovich, wrote in a note.

"The bulk of DXY's gains this year have unfolded over just a handful of marquee sessions, and outside that it has been decidedly consolidative," he said. "The lacklustre DXY in recent days looks mostly like a continuation of that profile."

The dollar slipped 0.12% to 150.505 yen JPY=EBS, with new figuresshowing consumer inflation stayed at the BOJ's 2% target in January, rather than dipping below it for the first time in nearly two years, as economists had predicted.

The euro was unchanged at $1.0850, following a 0.27% advance in the previous session. Sterling GBP=D3 edged 0.04% lower to $1.2680, following five straight sessions of gains.

Bitcoin BTC=BTSP was last about 3% higher at $56,190, after earlier jumping to $57,055 for the first time since December of 2021.

Elsewhere, the Australian dollar AUD=D3 added 0.1% to $0.65475ahead of monthly consumer price data, due Wednesday.

The kiwi NZD=D3 eased 0.13% to $0.6165, with traders gearing up for what could turn out to be a significant policy meeting by the Reserve Bank of New Zealand (RBNZ) on Wednesday.

Markets are pricing in a one-in-three chance the RBNZ will raise its 5.5% official cash rate to combat stubborn inflation.

"Given rich NZD positioning and the current rates pricing, if we see the RBNZ leave the cash rate on hold it may cause immediate NZD selling," Chris Weston, head of research at Pepperstone, wrote in a note.

"I am seldom one to advocate trading a central bank meeting in isolation, but I see the risk skewed for a higher AUDNZD on the statement."

World FX rates

(Reporting by Kevin Buckland Editing by Shri Navaratnam and Kim Coghill)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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