A pack of US dollar banknotes is fanned out for a photo.

Igor Golovniov | SOPA pictures | LightRocket via Getty Images

The dollar held up after its first consecutive gains in two weeks on Thursday as positive data supported expectations that the U.S. economy would recover from the coronavirus pandemic faster than most of its peers.

Bitcoin was trading just before the new record high of $ 52,640, which was hit overnight. The roughly 58% rise this month caused some analysts to warn that the rally may not be sustainable.

Government stimulus measures helped US retail sales rebound strongly in January, while industrial production and producer price data also delivered robust positive surprises.

Investors expect another boost from Joe Biden’s proposed $ 1.9 trillion COVID-19 relief package. The president will meet with working class leaders on Wednesday to gather support for the plan.

Meanwhile, minutes of the Federal Reserve’s meeting last month reaffirmed the central bank’s readiness to stimulate the economy while keeping monetary conditions extremely accommodative.

“Biden’s stimulus plans, a sharp drop in new infections and the rapid roll-out of vaccines put the US well-positioned to recover sooner than most,” Westpac strategists wrote in a customer report.

“That will create periodic upward movements in the USD.”

However, like many analysts, the Westpac team expect the dollar to fall this year, weighed down by relentless monetary pressures from the Fed.

The dollar index barely changed on Thursday in Asia at 90.943, after rising 0.2% overnight and 0.4% on Tuesday.

The meter is up about 1% this year, bouncing back from a nearly 7% decline in 2020 that expanded to a 2-1 / 2-year low of 89.206 in early January.

Westpac recommends fresh dollar index short positions on rallies towards 91.0.

The euro barely changed at $ 1.20385 after falling 0.5% overnight, most of it in two weeks.

The dollar was nearly unchanged at 105.845 yen after falling Wednesday from a five-month high of 106.225.

Government bond yields have given the dollar a boost in recent days. The return on the 10-year benchmark note rose overnight from around 1.20% at the end of last week to 1.333%. In Asia, it retreated to 1.2669% on Thursday.

“Rising US yields have prevented the dollar from falling for the time being,” said Osamu Takashima, Tokyo-based head of G10 FX strategy at Citigroup Global Markets Japan.

“In the long term, we remain bearish against the US dollar: we expect a risky environment worldwide and under such circumstances believe that the downward pressure on the US dollar could revive.”

Takashima expects the dollar to rise to 107 yen before falling to 102 yen in the next three months.