The dollar probed four-week highs against the yen on Monday, underpinned by expectations of higher US interest rates, while bitcoin seized the spotlight as futures of the cryptocurrency began trading. US employment data on Friday showed a bigger rise in jobs than expected in November, but the dollar's gains were capped by disappointing wage data that analysts said could weigh on the pace of interest rate hikes next year.
Bitcoin was up 7.6 percent at $15,755.08 on the Luxembourg-based Bitstamp exchange. The first bitcoin futures began trading at 6 p.m. (2300 GMT) on CBOE Global Markets Inc's CBOE.O CBOE Futures Exchange. The futures are cash-settled contracts based on the auction price of bitcoin in US dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.
The most-traded futures contract opened at $15,460 before leaping to a high of $18,700 - a gain of 21 percent. They last stood at $17,770. The acting governor of the Reserve Bank of New Zealand on Sunday said bitcoin appeared to be a "classic case" of a bubble.
"With a bubble you never know how far it is going to go before it comes around," Grant Spencer told TVNZ. Investors continued to weigh the gist of Spencer's remarks and assess whether the cryptocurrency was in a bubble that was in danger of bursting, even as some charged ahead with positions.
"Regardless of what side of the debate you're on, what's undeniable is that the current euphoria and the extreme levels of price volatility offer the brave of heart some excellent speculative opportunities," Stephen Innes, head of Asian trading at currency broker Oanda said in a note to clients. The US Federal Reserve is widely expected to raise interest rates at its two-day policy meeting that will end on Wednesday, and is seen as possibly tightening two or three times in 2018. But still-sluggish inflation has clouded next year's policy outlook.
"There is a consensus that the Fed will hike this week, so what investors are most interested in is any clue as to what it will do next year, and the pace of interest rate increases," said Yutaka Miura, a senior technical analyst at Mizuho Securities in Tokyo. Against its Japanese counterpart, the dollar edged up 0.1 percent to 113.59 yen, probing levels last touched in mid-November.
The Bank of England and the European Central Bank will also meet this week and are expected to hold rates steady. The euro was steady at $1.1778, holding above its nearly three-week low of $1.1730 plumbed on Friday.
The dollar index, which tracks the greenback against a basket of six major rival currencies, inched down 0.1 percent to 93.832. Sterling was up 0.1 percent at $1.3398 but well off Friday's high of $1.3521 hit as after a breakthrough in Brexit negotiations. With the UK economy still facing headwinds, market participants locked in gains.
Britain and the European Union reached an accord on Friday that paves the way for talks on future trade ties, easing immediate pressure on Prime Minister Theresa May and raising investors' hopes for an orderly Brexit. May will hail "a new sense of optimism" in Brexit talks on Monday, telling parliament Britain and the European Union should sign off on a deal at a summit this week "to move forwards together" to discuss future trade ties.