Dollar gains after week of losses, Bitcoin hovers near record high

U.S. dollar banknotes.
Liu Jie | Xinhua | Getty

The dollar rose on Friday from two-and-a-half-year lows as some investors squared positions heading into year-end, while Bitcoin edged lower but still hovered near its all-time high.

The dollar index was last up 0.17% to 89.9840, after dropping to 89.723 on Thursday.

Brexit will remain in focus on Friday for currency investors, although it is unclear with the ongoing trade deal negotiations between Britain and the European Union will be much of a driver, said Vassili Serebriakov, currency strategist at UBS in New York.

The EU said on Friday there were just hours left to strike a Brexit trade deal as the two sides race to prevent a turbulent finale to the Brexit crisis at the end of the month.

"We're moving toward the year-end so you would expect levels to decrease going into the last couple of weeks of the year," Serebriakov said.

The pound, last down 0.66% to $1.3494, has reversed some of its gains against the dollar and euro as the Brexit talks continued.

Wall Street's main indexes opened at record highs as a coronavirus stimulus package remained in focus ahead of a weekend deadline for a deal, with retail stocks rising on the possibility of strong holiday sales. However, by mid-morning, major indices turned lower.

But the U.S. Congress looked increasingly unlikely on Friday to meet a deadline to agree on $900 billion in fresh COVID-19 aid and instead may pass a third stopgap spending bill to keep the government from shutting down at midnight.

Investors remain focused on Bitcoin, which last traded around $22,406, down 1.67% after rocketing to its highest-ever level on Thursday. The 2020 rally has also been driven by increasing expectations it will become a mainstream payment method, with PayPal opening its network to cryptocurrencies.

The Bank of Japan announced on Friday an extension of its COVID-19 loan programs by six months and a surprise review of its policy to consider "further effective and substantive monetary easing," to conclude by March 2021.

The dollar rebounded as much as half a percent against the yen to 103.595 yen. It was last up 0.25% at 103.3350.

Serebriakov, who remains focused on some of the overnight events, said the Bank of Japan's policy decision was "a mild surprise."