Dollar buoyed by US recovery hopes, bitcoin near record $52,640

The dollar held its ground on Thursday after its first back-to-back gains in two weeks as upbeat data bolstered expectations that the US economy would recover from the coronavirus pandemic faster than most of its peers.

Bitcoin traded just shy of the new record high of $52,640 reached overnight, with its roughly 58% surge this month prompting some analysts to warn that the rally might be unsustainable.

Government stimulus cheques helped US retail sales rebound sharply in January, while industrial output and producer prices data also provided robust upside surprises.

Investors expect a further boost from Joe Biden's proposed $1.9 trillion Covid-19 relief package, with the president meeting top labour leaders on Wednesday to drum up support for the plan.

Meanwhile, minutes from the Federal Reserve's policy meeting last month reinforced the central bank's willingness to let the economy run hot while keeping monetary settings ultra-accommodative.

"Biden's stimulus plans, a steep decline in new infections and rapid vaccine rollout leave the US well positioned to recover sooner than most," Westpac strategists wrote in a client note.

"That will generate periodic bouts of USD upside."

However, like many analysts, Westpac's team expects the dollar to decline this year, weighed by the Fed's relentless money printing.

The dollar index was little changed at 90.89 early Thursday in Asia after strengthening 0.2% overnight and 0.4% on Tuesday.

The gauge has gained about 1% this year, rebounding from an almost 7% slide in 2020 that extended to a 2-1/2-year low of 89.206 in early January.

Westpac recommends fresh dollar index shorts on rallies toward 91.0.

The euro was little changed at $1.2046 after sliding 0.5% overnight, the most in two weeks.

The dollar was almost flat at 105.875 yen, following a pullback Wednesday after reaching a five-month high of 106.225.

Onshore trading of the Chinese yuan resumes Thursday following Lunar New Year holidays.