Dollar gains after three-day fall as risk rally takes a breather
The dollar drifted higher on Friday after three straight days of losses, and riskier currencies fell, as bleak non-U.S. economic data gave global equity markets reason to pause after another week of record highs.
As a safe haven, the U.S. currency tends to rise in times of financial and economic stress that results in lower risk appetite.
But that trend paused on Friday, as market sentiment pulled back. Global shares slipped off record highs as the U.S. dollar steadied, up 0.1% on the day at 90.209. The dollar index though still posted its biggest weekly loss since mid-December.
U.S coronavirus deaths have now reached nearly 410,000, with close to 25 million cases.
The Federal Reserve next week will hold its first monetary policy meeting of the year and strategists expect the Fed to stay dovish, and officials “will probably note signs of slowing in the economy since the December meeting,” NatWest Markets said in a research note.
Gloomy economic data also did little to brighten the mood, as UK data showed British retailers struggled to recover in December.
Economic activity in the euro zone shrank markedly in January as stringent lockdowns to contain the coronavirus pandemic hit the bloc’s dominant service industry hard.
In afternoon trading, the dollar rose 0.3% against the yen to 103.815.
Data from Japan overnight showed factory activity slipped into contraction in January and the services sector was more pessimistic as emergency measures to combat a COVID-19 resurgence dampened sentiment.
The euro was little changed at $1.2167.
The single currency rose on Thursday after the European Central Bank’s policy rate announcement, with the ECB saying it might not need to use its full asset-purchase envelope.
Reference: CNBC
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