Dollar extends rebound as hopes for stimulus aid cap short bets

The dollar extended its rebound on Monday as U.S. yields rose and hopes for more stimulus to support the economy boosted bearish bets, pulling the greenback from recent multi-year lows.

President-elect Joe Biden, together with Democrats who gained control of both houses in Congress, has promised “trillions” in additional COVID-19-relief spending.

The Aussie and the kiwi dropped over 0.6% against the dollar to one-week lows, while the pound and the euro dropped 0.4% to hit two-week lows.

The euro last sat at $1.2167 in Asian trade after rising as high as $1.2349 last week. The dollar index dropped almost 12% since hitting a three-year peak in March. It gained 0.1% to 90.418 on Monday.

The Aussie fell 1% to $0.7693, while the kiwi lost 0.6% to $0.7194. The dollar climbed 0.2% to 6.4864 yuan and it gained 0.6% to a two-week high of 1,099.58 South Korean won.