By Kevin Buckland
TOKYO (Reuters) -U.S. fiscal concerns and a tepid auction of Treasury bonds pushed the dollar to a two-week low versus the yen on Thursday, while the U.S. Congress moved closer to passing President Donald Trump’s bill for massive cuts in taxes and spending.
The lacklustre 20-year bond sale reinforced the “Sell America” narrative, weighing not just on the dollar but on Wall Street as well, with traders already jittery after Moody’s cut the triple-A U.S. credit rating last week.
Bitcoin pushed to an all-time high on Thursday, partly as investors sought out alternatives to U.S. assets. Gold also benefited, reaching an almost two-week top of $3,325.79 and putting it within $175 of April’s record peak.
“Despite falling equities, the U.S. dollar has not seen traditional safe-haven demand, with gold, the euro and the yen instead benefiting,” said James Kniveton, a senior corporate FX dealer at Convera.
In the process of getting Trump’s bill to the Senate, “fiscal restraint could emerge, but market sentiment suggests scepticism,” he said.
The bill cleared an important procedural hurdle in the lower house on Wednesday, when a gatekeeper committee approved the measure and set up a floor vote for passage to occur within hours.
House passage would set the stage for weeks of debate in the Republican-led Senate.
The nonpartisan Congressional Budget Office estimates the bill will add $3.8 trillion to the $36.2 trillion in U.S. debt over the next decade.
The dollar slipped as much as 0.4% to 143.15 yen, the weakest level since May 7.
It had managed an early pop of as much as 0.5% when Japanese Finance Minister Katsunobu Kato said he did not talk about foreign-exchange levels in his discussions with U.S. Treasury Secretary Scott Bessent on the sidelines of the Group of Seven meetings in Canada.
However, the short-lived response suggests investor suspicions run deep that the White House wants a weaker dollar versus many Asian currencies.
South Korea’s currency jumped on Wednesday to 1,368.90 per dollar, its strongest level since November 4, after the Korea Economic Daily reported that Washington had demanded Seoul come up with measures to boost the won. It retreated to 1381.00 per dollar on Thursday.
The euro was last flat at $1.1326, after rising 0.4% on Wednesday for a third straight session.
Sterling rose 0.1% to $1.3431.
The Swiss franc ticked up 0.1% to 0.8246 per dollar.
Bitcoin climbed as high as $111,862.98, a fresh all-time peak and a 3.3% increase from Wednesday’s close.
“There are tentative signs that as global bond markets face strain beneath the weight of higher inflation risks and greater issuance, along with the mini-confidence crisis in U.S. assets, bitcoin is behaving as a genuine fiat hedge and alternative store of value,” said Kyle Rodda, senior financial markets analyst at Capital.com.
(Reporting by Kevin Buckland; Editing by Sonali PaulEditing by Shri Navaratnam and Edmund Klamann)
