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The dollar was little changed against major currencies on Tuesday as traders brushed off encouraging Japanese inflation data and Bank of Japan minutes that signaled policy-makers favored sticking to a loose monetary policy.
Bitcoin staged a comeback on bargain-hunting after it recorded a 25 per cent decline on the Luxembourg-based Bitstamp exchange last week, its biggest weekly drop since April 2013.
Currency trading volume was light as London and many major financial centers remained closed after the Christmas holiday.
“The market is going to be quiet for the balance of the week,” said Jason Leinwand, chief executive officer of FirstLine FX Currency Strategy in Randolph, New Jersey.
The greenback is expected to be supported into early 2018 in the aftermath of the biggest overhaul of the US tax code in 30 years which became law last week.
The consensus among analysts was that a drop in corporate tax rates would spur business investments, bolstering the US economy and the dollar even though the tax plan would add $1.5 trillion to the national debt in 10 years.
“The dollar has some room to strengthen in the first half of 2018,” Leinwand said.
Speculators dialed back their net short dollar bets last week ahead of the passage of the tax legislation, according to Commodity Futures Trading Commission data released on Friday.
Some traders said it was too early to tell whether US companies would spend more for equipment and hire more workers under a lower-tax scheme in the coming months.
The dollar held steady at $113.16 yen and flat versus the euro at $1.1863
The euro was barely budged at 134.23 yen.
The market had a muted reaction to data released early on Tuesday which showed that Japan’s core consumer prices rose for the 11th straight month, up 0.9 per cent year-on-year, and household spending jumped in November.
While the inflation rate remains distant from the Bank of Japan’s 2 per cent target, the rise offered some hope that a steady economic recovery will gradually drive up prices.
Minutes of the BOJ’s October meeting, released on Tuesday, showed most members shared the view that the central bank should maintain its easy policy.
The BOJ kept monetary policy steady last week and its governor reassured markets the central bank will lag well behind overseas peers in ending its ultra-easy policies.
Among cryptocurrencies, bitcoin gained 14 per cent following last week’s selloff. It was last at $15,885.00 after trading as high as $16,147.87 on Bitstamp.