The dollar retreated further from the 14-year highs it reached on Tuesday as investors sought to start the New Year with profit taking on fears that the “Trump rally” may be nearing its end. The dollar index fell to 102.23 .DXP on Thursday morning after hitting a high of 103.82 .DXY on Tuesday. The dollar traded at 116.62 yen on Thursday, a dip of 0.5 percent. The euro, which hit 14-year lows on Tuesday, also posted gains against the dollar on Thursday, rising 0.3 percent to trade at $1.0524. The Australian dollar hit a fresh two-week high, trading at $0.7303.
The biggest currency fluctuation during Thursday’s Asian session was that of the Chinese offshore yuan which posted its largest gains against the dollar in a year, after struggling with its steepest fall against the dollar only a day prior. On Thursday the dollar was trading at 6.8860 yuan, which also reflected the currency’s onshore rise. China’s central bank prohibits the currency from fluctuating more than 2 percent per day from its daily fixing in onshore trade. Though the central bank cannot control offshore trading as tightly, rates usually remain similar to onshore trading rates. The onshore trading rate kept the dollar at 6.928 yuan on Thursday.
The currency’s offshore moves on Thursday likely resulted in part due to new regulations which will increase reporting requirements on foreign currency and will add more oversight on the purchase of foreign currencies.
Is Bitcoin the New Safe Haven?
Bitcoin prices surged 122 percent in 2016, hitting an all-time high earlier this week. The crypto-currency traded at $1,131.17 on Thursday, just off its all-time highs of $1,141.16. Investors in China have been supporting the currency, largely due to the yuan’s decline and the challenges of taking the currency out of the country. Likewise, in India, bitcoin purchases have been fueled by Prime Minister Narendra Modi’s decision to remove 500 and 1000 rupee notes from the market, which withdrew 86 percent of the bills in circulation until new bills can be brought into circulation.
The total market cap for bitcoin circulation is only about $16 billion, a small amount compared to other assets. Yet, as the currency has been trading for only eight years and has been extremely volatile, most traders are hesitant to jump in. Still, there are those who think that investing in bitcoin can be a great way to diversify your investment portfolio, especially in today’s volatile world. The difficulty in obtaining the currency, however, may prevent it from obtaining safe haven status in the immediate future, despite its obvious popularity in some regions.