(Adds details, updates prices; previous LONDON)
* Dollar recovers against most majors; lockdown worries weigh on pound
* China's yuan soars
* Bitcoin slumps after stellar rally
By Chuck Mikolajczak
NEW YORK, Jan 4 (Reuters) - The U.S. dollar recovered after falling to its lowest level since April
2018 on Monday, as surging coronavirus cases undermined bullish sentiment had that kicked off the new year
across global markets and pushed investors into riskier currencies, such as the Chinese yuan and the euro.
With U.S. interest rates pinned at record lows, massive U.S. deficits and a belief that rebounding
world trade will drive non-dollar currencies higher, the dollar weakened on the first day of trading in
2021 after falling nearly 7% in 2020.
The Chinese currency was the biggest beneficiary of the weak dollar trade as the yuan rocketed to a
two-and-a-half-year high.
The dollar index =USD rose 0.013%, after touching a low of 89.415, a level last seen on April 17,
2018. The greenback turned slightly higher after U.S. stocks turned lower after opening at record levels
but the longer-term outlook remains weak.
"The market is hoping this is the year we will see the recovery kick into high gear and that is coming
at the expense of the dollar," said Joe Manimbo, senior market analyst at Western Union Business Solutions
in Washington DC.
"The big negative for the dollar is that the Fed has vowed not to raise rates pre-emptively, so
expectations of a longer wait for the Fed to normalize is expected to be a lasting headwind on the
dollar."
The Chinese yuan CNH=D3 strengthened to 6.44 yuan per dollar after Beijing cut the weighting of the
U.S. dollar in a key currency index basket. That could push the yuan's value higher against its peers this
year, analysts said, while Chinese factory activity continued to accelerate in December.
After a dip on New Year's Eve profit-taking, the euro EUR= was up 1.08% to $1.2268, after hitting a
high of 1.231, its highest level since April 2018 as positive economic indicators helped the currency
strengthen. Also, a closely-watched gauge of growth in British manufacturing activity rose to its highest level in
three years as factories rushed to complete work before the end of the post-Brexit transition period on
Dec. 31. Sterling GBP= , however, relinquished its early gains against the dollar, retreating below $1.37 on
concerns about tighter lockdown measures.
The safe-haven Japanese yen strengthened 0.05% versus the greenback at 103.16 per dollar, after
Japanese Prime Minister Yoshihide Suga said his government was mulling a state of emergency in Tokyo as
coronavirus cases rise.
Bitcoin BTC=BTSP tumbled, falling as low as $27,734 at one point, after gains over the new year's
break that saw the world's most popular cryptocurrency rise to a record $34,800. It was last down 3.78% at
$31,848.09.
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Currency bid prices at 10:38AM in London (01538 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2270 $1.2218 +0.42% +0.42% +1.2310 +1.2211
Dollar/Yen JPY=D3 103.1650 103.2900 -0.16% -0.17% +103.3100 +102.7300
Euro/Yen EURJPY= 126.57 126.15 +0.33% -0.28% +126.7800 +126.1100
Dollar/Swiss CHF=EBS 0.8812 0.8847 -0.38% -0.38% +0.8845 +0.8785
Sterling/Dollar GBP=D3 1.3571 1.3662 -0.66% -0.66% +1.3703 +1.3562
Dollar/Canadian CAD=D3 1.2738 1.2734 -0.11% +0.02% +1.2739 +1.2666
Aussie/Dollar AUD=D3 0.7681 0.7693 -0.15% -0.15% +0.7740 +0.7681
NZ NZD=D3 0.7183 0.7181 +0.04% +0.04% +0.7230 +0.7183
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX
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china yuan 2 year https://tmsnrt.rs/388Mrsi
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