FOREX-Dollar droops before key data, bitcoin soars above $57,000

By Kevin Buckland

TOKYO, Feb 27 (Reuters) – The dollar traded on the back foot on Tuesday, as markets looked ahead to a week of U.S. economic data that will provide fresh signals on how soon the Federal Reserve may begin cutting interest rates.

Leading cryptocurrency bitcoin soared to a more than two-year high above $57,000 after enterprise software firm MicroStrategy Inc MSTR.Oannounced it had bought about 3,000 more of the tokens for $155 million.

Markets have all but ruled out a cut at the Fed’s March meeting and have recently pushed back expectations for a cut to June from May, CME’s FedWatch Tool showed, following strong U.S. consumer and producer price data.

U.S. durable goods data is due later on Tuesday, while January’s U.S. personal consumption expenditures price index, which is the Fed’s preferred measure of inflation, will be released on Thursday.

“A still softish DXY (dollar index) doesn’t quite convey the USD’s story right here … and, if anything, key upcoming event risk can potentially fuel another leg up,” Westpac’s head of FX strategy, Richard Franulovich, wrote in a note.

“The bulk of DXY’s gains this year have unfolded over just a handful of marquee sessions, and outside that it has been decidedly consolidative,” he said. “The lacklustre DXY in recent days looks mostly like a continuation of that profile.”

The dollar slipped 0.13% to 150.485 yen JPY=EBS, as Japan’s currency firmed following the release of figuresshowing consumer inflation stayed at the Bank of Japan’s 2% target, rather than dipping below it for the first time in nearly two years, as economists had forecast.

The euro was unchanged at $1.08505, following a 0.27% advance in the previous session.

Bitcoin BTC=BTSP was last 3.3% higher at $56,338, after earlier jumping to $57,055 for the first time since December of 2021.

Risk-sensitive antipodean currencies sank amid a slide in regional equities, continuing a retreat from multi-week peaks.

The Australian dollar AUD=D3 lost 0.2% to $0.6528, after reaching a three-week high of $0.6595 on Thursday.

The kiwi NZD=D3 eased 0.3% to $0.61555, after touching the highest since Jan. 15 at $0.6218 on Thursday.

Traders are gearing up for what could turn out to be a significant policy meeting by the Reserve Bank of New Zealand (RBNZ) on Wednesday. Markets are pricing in a one-in-three chance the RBNZ will raise its 5.5% official cash rate to combat stubborn inflation.

World FX rates https://tmsnrt.rs/2RBWI5E

(Reporting by Kevin Buckland Editing by Shri Navaratnam and Kim Coghill)

((Kevin.Buckland@thomsonreuters.com;))

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