Dollar gains on Asia's virus worry; cryptocurrencies slide on Musk tweet

An employee of the Korea Exchange Bank counts one hundred U.S. dollar notes during a photo opportunity at the bank's headquarters in Seoul
An employee of the Korea Exchange Bank counts one hundred U.S. dollar notes during a photo opportunity at the bank's headquarters in Seoul April 28, 2010. REUTERS/Jo Yong-Hak
  • Cautious mood in Asia as Singapore, Taiwan see outbreaks
  • Risk currencies slip, but dollar still faces broad pressure
  • Fed minutes in focus
  • Graphic: World FX rates

SINGAPORE/TOKYO, May 17 (Reuters) - The U.S. dollar was supported on Monday amid renewed worries about coronavirus restrictions in Asia, but investors are heavily positioned for it to fall while the U.S. Federal Reserve keeps rates low.

Bitcoin skidded to a three-month low after Tesla Inc (TSLA.O) boss Elon Musk suggested at the weekend that the car maker is considering selling or may have already sold some of its holdings in the cryptocurrency. read more

Easing commodity prices and fresh virus outbreaks in Singapore and Taiwan - where COVID-19 had been contained - helped modest dollar gains of 0.3% against the Australian dollar and 0.4% versus the New Zealand dollar.

The greenback was little changed against the euro and the yen , but it remained close to testing major support levels, which if broken could see a return to a downtrend that pressed it lower through April.

A dollar bounce that followed higher-than-expected inflation data last week has also faded as traders figure the U.S. Federal Reserve will keep rates low.

The dollar last traded at $1.2130 per euro and has support around $1.2179. The dollar index is, likewise, at 90.397, just above key support at 89.677 and 89.206. It bought 109.37 yen and traded at $0.7756 per Aussie and $0.7219 per kiwi .

Fed minutes, from an April meeting that predated the data surprise on inflation last week, are due on Wednesday and are the next market focus for clues on the central bank's thinking.

"We expect the minutes ... to reiterate that policymakers consider the pick up in inflation to be transitory," said Kim Mundy, a currency strategist at the Commonwealth Bank of Australia in Sydney.

"The upshot is that we do not expect the (Fed) to consider tapering its asset purchases soon," she said. "The dollar is expected to resume its downtrend this week after last week's CPI-inspired boost."

Cryptocurrencies traded under pressure after another weekend bouncing around following a tweet from Tesla's Musk suggesting the company is possibly selling its bitcoin holdings. read more

Bitcoin last traded down 7.13% at $43,133. It earlier fell to $42,185, the lowest since Feb. 8. Ether fell to a two-week low of $3,123.

Speculators increased their bets against the dollar last week, mostly by adding to bets on the euro and to a lesser extent sterling as Britain and Europe head toward recovery.

Sterling was perched near a two-and-a-half-month high on Monday, at $1.4086, as Britain reopens its economy after a four-month COVID lockdown. read more

Things are travelling in the opposite direction in Asia where some early leaders in taming the pandemic are now dealing with new outbreaks.

Singapore and Taiwan have both tightened curbs as cases rise, which weighed on the Singapore dollar , while the Taiwan dollar fell to a three-week low on Monday. read more

The onshore yuan was little changed at 6.4380 per dollar after a mixed round of economic data showed China's industrial output had slowed and retail sales missed forecasts last month. read more


Currency bid prices at 0509 GMT

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Reporting by Tom Westbrook and Stanley White; Editing by Gerry Doyle and Muralikumar Anantharaman

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