Dollar hovers near one-year high while Bitcoin hits $50,000

© Reuters. FILE PHOTO: A U.S. dollar banknote is seen in this illustration taken May 26, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

By Ritvik Carvalho

LONDON (Reuters) - The U.S. dollar edged back towards a one-year high versus major rivals on Tuesday ahead of a key payrolls report at the end of the week while cryptocurrency Bitcoin hit $50,000 for the first time in four weeks.

The risk-sensitive Australian dollar was among the biggest fallers, with the Reserve Bank of Australia reiterating that it does not expect to raise interest rates until 2024.

The U.S. dollar index, which measures the currency against six rivals, rose 0.13% to 93.932, moving back towards Thursday's peak of 94.504, its highest since late September 2020.

The index had rallied as much as 2.8% since Sept. 3 as traders rushed to price in tapering of economic stimulus this year and possible rate rises for 2022.

The dollar has also benefited from safe-haven demand amid worries ranging from the risk of global stagflation to the U.S. debt ceiling standoff.

"The dollar started the week on the back foot yesterday, failing to rise on yet another equity sell-off, and suffering from the OPEC+ decision to stick to gradual (oil) supply hikes (400k barrels/day) which sent oil prices (and oil-sensitive currencies) higher," ING strategists said in a note.

"As highlighted in yesterday’s FX Daily, we think markets will keep buying the dips in the dollar, and this is what appears to have happened overnight, as the greenback rebounded across the board."

Friday's non-farm payrolls data is expected to show continued improvement in the labour market, with a forecast for 488,000 jobs to have been added in September, a Reuters poll showed.

Meanwhile, an index of Asia-Pacific equities fell by 0.74% after a 1.3% tumble overnight for the S&P 500.

The Aussie dropped 0.1% to $0.7281, retreating further from Monday's four-day high of $0.73045.

The New Zealand dollar declined 0.34% to $0.6939, also backing away from a four-day peak at $0.6981. The Reserve Bank of New Zealand (RBNZ) decides policy on Wednesday, with markets priced for a quarter point increase to interest rates.

"The RBA’s firm on‑hold stance is a weight on AUD," Commonwealth Bank of Australia (OTC:CMWAY) strategist Joseph Capurso wrote in a report.

For the RBNZ, "with markets already pricing a rate hike cycle, the likelihood of material NZD upside is low", he said.

The dollar gained 0.25% to 111.19 yen, while the euro weakened by 0.21% to $1.15965.

Sterling edged up 0.15% to $1.3629 and hit a three-week high against the euro at 85.11 pence. [GBP/]

While the consensus view is for further gains for the greenback - with speculators pushing net long bets to their highest since March 2020 - TD Securities warns that headroom may be limited.

"While the near-term USD bias leans higher, we're wary about chasing the move at these levels," Mark McCormick (NYSE:MKC), TD's global head of FX strategy, wrote in a report.

There is a lot of bad global news priced into the U.S. dollar already and "the key for markets in the weeks ahead is to sort out the extent of the risk premium already priced in versus how these factors play out", McCormick said.

Cryptocurrencies rallied, meanwhile. Bitcoin, the world's biggest cryptocurrency by market value, hit $50,000 for the first time since Sept. 7.

Graphic: World FX rates https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index