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Bitcoin Hits New Record High, Dollar Remains Under Pressure
The yen continued its ascent on Monday, buoyed by an upward revision in Japan’s growth figures, which fueled speculation that interest rates could see an increase this month. Meanwhile, bitcoin soared to a new record high above $71,600, adding to the fervor in the cryptocurrency market.
Yen Strengthens, Dollar Slips
The dollar dipped by 0.28% against the yen, trading at 146.66 yen as the Japanese currency extended its climb. Earlier, the dollar reached as low as 146.54 yen, nearing Friday’s five-week low of 146.48 yen. Reports suggest that an increasing number of Bank of Japan (BOJ) policymakers are considering ending negative interest rates at the upcoming March 18-19 meeting, driven by expectations of significant pay raises from Japan’s largest firms.
BOJ Policy Shift and Economic Growth
The possibility of the BOJ exiting loose monetary policy settings gained traction with an upward revision to Japan’s economic growth in the last quarter, enabling the country to evade a technical recession. Lee Hardman, currency analyst at MUFG, noted that the revised GDP growth has instilled confidence among market participants regarding the BOJ’s potential policy adjustments.
Dollar Index Stabilizes, Focus on U.S. Data
The dollar index remained relatively unchanged at 102.69, near the two-month low of 102.33 reached on Friday. The cooling U.S. labor market, as indicated by monthly payrolls figures, keeps the Federal Reserve on track for policy easing. Traders await crucial consumer price index inflation data on Tuesday, with June currently seen as the most likely time frame for the first rate cut.
Bitcoin’s Rally Continues
Bitcoin surged to a new all-time high above $71,677, propelled by increased investments in new spot bitcoin exchange-traded funds and expectations of impending interest rate cuts by the Federal Reserve.
Euro and Sterling Dynamics
The euro remained flat at $1.0941 after hitting $1.0980 on Friday, its highest level since January 12. The European Central Bank’s decision to maintain record-high rates while laying the groundwork for potential future cuts influenced the currency’s movement. Sterling slipped slightly to $1.2844 after reaching $1.2890 on Friday, amid speculation that the Bank of England might delay rate cuts compared to other central banks.
Australian Dollar Reacts to U.S. Labor Market Trends
The Australian dollar declined by 0.2% to $0.6613 following a 1.55% surge last week. The weakening U.S. dollar, spurred by labor market slowdown, influenced the Australian dollar’s movements.
As market participants await key economic data releases and central bank decisions, including the U.S. inflation data and the Bank of England’s policy stance, currencies continue to react to shifting global economic dynamics and policy expectations.
