Yesterday USD Index went 0.9% down, and during this morning it slipped additional 0.8% to a levels we have not seen from December 14. After a gentle recovery it’s traded now a bit above 102 level – yet, very close to the three-week minimum. The probable reason is: investors are locking in their profits, as Donald Trump’s inauguration is approaching. The enthusiasm about a new American president helped US stocks and US currency to reach multiple highs. However, now more and more traders and economists start thinking how much of his plans will Trump bring in to life. As concerns are rising and stakes are high, many prefer bird in the hand. Especially given the fact, it’s a very fatty bird: at a daily peak before yesterday USD Index reached 103.81: +8.2% higher than its minimum level at November 09, following the elections result.
The biggest yesterday’s US event – FOMC Meeting Minutes release – has not surprisingly impact the Dollar. It added some volatility to USD Index, but eventually three hours later it was just at the same place it had started before the event. Markets liked to read that "more expansionary fiscal policy" (by an upcoming president Trump) raised the possibility of "somewhat tighter monetary policy than currently anticipated." However, this news was not strong enough, apparently. ADP Nonfarm Employment Change and ISM Non-Manufacturing PMI are expected today, and positive results can, probably, stop Dollar’s falling. Results worse than expected can push Greenback down even further, giving chance to additional Majors.
One more asset, gaining forces last days – especially as USD is sinking – is Bitcoin. Earlier this week, the crypto currency surged above $1,000 for the first time in more than three years. The rally did not stop there, and yesterday we saw an exceptionally positive day for Bitcoin: it closed +7.6% up, reaching at maximum 1139 US Dollars per coin. The yield from the New Year is +15%. It’s +50% from the start of December and +158% gain from the start of 2016.
Where the fuel for Bitcoin is coming from? The answer is China. When Chinese Yuan is shrinking and Stock Exchanges in Shanghai and Hong Kong are not safe no more, Asians are looking for some other assets to invest to. As by Business Insider Intelligence (citing data from Cryptocompare): "In the first 24 hours of the new year, over 5 million bitcoins were bought in Chinese yuan, equating to $3.8 billion. In contrast, just 53,000 bitcoins were bought in US dollars."
The crypto currency added +1.5% so far this morning.