Dollar index sinks to four-week low, as bitcoin sags

The dollar fell to a four-week low against a basket of currencies on Thursday on a less certain U.S. economic outlook after the passage of major tax cuts, while bitcoin succumbed to renewed selling, marking an over 30 percent drop in less than two weeks.
Commodity-linked currencies including the Australian and New Zealand dollars posted two-month highs with copper prices hitting a four-year high and oil holding at its strongest levels since mid-2015.
“The dollar had gained on expectations of tax reform. Now that it’s here, we are seeing it sold off,” said Sireen Harajli, currency strategist at Mizuho in New York.
Last week’s passage of the biggest overhaul of the U.S. tax code in 30 years gave the dollar some support, but markets are not confident that the tax reform will feed through quickly into increased consumer confidence.
An index which tracks the greenback against six major currencies slipped as much as half a percent on Thursday to its weakest since Dec. 1. It was last down 0.39 percent at 92.661.
The dollar index has dropped more than 9 percent this year, putting it on track for its biggest annual slide since 2003. The greenback hit its strongest in 14 years at the start of 2017 on hopes that U.S. President Donald Trump would implement pro-growth, pro-inflation measures.
But it has fallen on worries that Trump would not succeed in pushing through his economic agenda, and as other countries’ central banks have moved towards tightening monetary conditions, lessening the divergence between their policies and that of the Federal Reserve.
The euro rose 0.50 percent to $1.1945 after touching its highest in a month. It has gained more than 13 percent so far this year, well on the way to its best annual performance since 2003.
The Australian dollar rose 0.24 percent to $0.7786, while the New Zealand dollar was up 0.28 percent at $0.7082.
Bitcoin, the biggest and best-known cryptocurrency, has dwarfed any gains in traditional financial markets this year, with a more than 1,400 percent rise. But since hitting record highs near $20,000 eleven days ago, it has fallen on profit-taking, market observers said.
“Professional people are taking money off the table and retail has followed,” said Alexander Kravets, co-founder and chief executive at New York-based XTRADE.IO.
It was last down 7.06 percent at $14,278.08 on the Luxembourg-based Bitstamp exchange.
Earlier on Thursday, South Korea’s government said it would impose additional measures to regulate speculation in cryptocurrency trading.(Reuters)