* Dollar index hits lowest since March 2018
    * Euro reaches new 2018 high versus dollar
    * Bitcoin breaks above $35,000
    * Graphic: World FX rates in 2021 https://tmsnrt.rs/2RBWI5E

 
    By Chuck Mikolajczak
    NEW YORK, Jan 6 (Reuters) - The dollar bounced after sinking
to its lowest level in nearly three years on Wednesday, with
markets anticipating a Democrat win in the U.S. Senate election
in Georgia that would clear the path for a larger fiscal
stimulus package.
    Democrats won one U.S. Senate race in Georgia and led in
another on Wednesday, edging closer to a sweep in a previous
Republican stronghold that would hand them control of Congress
and the power to advance President-elect Joe Biden's policy
goals.
    Analysts generally expect a Democrat-controlled Senate to be
positive for economic growth globally and thus for most riskier
assets, but negative for bonds and the dollar as the U.S. budget
and trade deficits swell even further.
    As markets priced in the Democrats winning both Georgia
seats, the dollar index hit its lowest since March 2018
at 89.206, but rebounded to last trade up 0.015% at 89.48.
    Fueling expectations of further stimulus measures was a weak
report on the labor market in the form of the ADP National
Employment Report, which showed private payrolls post their
first decline in eight months as coronavirus cases surge.
However, a reading on factory orders for November exceeded
expectations and indicated a sustained manufacturing recovery.

    But after a fall of nearly 7% in 2020 and a drop of as much
as 0.9% in the new year, the dollar turned higher as a crowded
trade began to unwind, which was also supported by a climb in
interest rates. Analysts still expect the longer-term trend for
the greenback to be weaker, however. nL1N2JH1B9]
    "People have been bearish on the dollar now for at least six
or nine months," said Minh Trang, senior FX trader at Silicon
Valley Bank in Santa Clara, California. 
    "Obviously you are going to have to take a little bit of a
breather every now and then."         
    The euro gave up earlier gains and was up 0.11% to
$1.2312, after earlier having risen past major resistance to as
high as $1.2349.
    Riskier currencies also surged, with the New Zealand dollar
 and Australian dollar touching their highest
in nearly three years and holding onto most of the gains even as
the dollar recovered. 
    The move was helped by a range of surveys overnight showing
that manufacturing globally had proved resilient in December,
despite rising coronavirus cases.    
    Elsewhere, U.S. President Donald Trump escalated tensions
with Beijing by signing an executive order banning U.S.
transactions with eight Chinese software applications.

    After surging on Monday and Tuesday, the yuan softened,
after China's central bank appeared to signal a preference for a
more moderate pace of intervention.
    The yuan has gained around 10% on the dollar since last May
as China's economic rebound has led the world's pandemic
recovery.
    Bitcoin traded above $35,000 for the first time,
rising to $35,879.35 in the Asian session and extending a rally
that has seen it rise more the 800% since mid-March.

    The gains eased slightly, with the cryptocurrency last up
4.81% at $35,676.61. 
    
    ========================================================
    Currency bid prices at 2:46PM (1946 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Dollar index                 89.4800        89.4740     +0.02%         +0.00%      +89.8030    +89.2060
 Euro/Dollar                  $1.2312        $1.2298     +0.11%         +0.77%      +$1.2349    +$1.2266
 Dollar/Yen                   103.1100       102.7400    +0.34%         -0.19%      +103.4400   +102.6100
 Euro/Yen                     126.94         126.30      +0.51%         +0.02%      +127.2300   +126.1500
 Dollar/Swiss                 0.8792         0.8783      +0.11%         -0.61%      +0.8821     +0.8759
 Sterling/Dollar              $1.3606        $1.3623     -0.11%         -0.40%      +$1.3670    +$1.3536
 Dollar/Canadian              1.2688         1.2668      +0.17%         -0.35%      +1.2722     +1.2631
 Aussie/Dollar                $0.7789        $0.7760     +0.42%         +1.30%      +$0.7820    +$0.7734
 Euro/Swiss                   1.0824         1.0802      +0.20%         +0.16%      +1.0836     +1.0799
 Euro/Sterling                0.9046         0.9020      +0.29%         +1.21%      +0.9085     +0.9018
 NZ                           $0.7281        $0.7251     +0.43%         +1.41%      +$0.7314    +$0.7237
 Dollar/Dollar                                                                                  
 Dollar/Norway                8.4175         8.4715      -0.78%         -2.12%      +8.4925     +8.3875
 Euro/Norway                  10.3610        10.3984     -0.36%         -1.01%      +10.4328    +10.3450
 Dollar/Sweden                8.1758         8.1758      +0.06%         -0.25%      +8.2123     +8.1259
 Euro/Sweden                  10.0632        10.0573     +0.06%         -0.13%      +10.0875    +10.0295
 


 (Reporting by Chuck Mikolajczak; Editing by Kirsten Donovan)