- Greenback headed for weekly gain on safe-haven demand
- Hedge fund assault, vaccine hurdles sour mood
- Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
The dollar edged higher on Friday, heading for a weekly gain, as lingering jitters about a coordinated assault on hedge fund short positions in the United States boosted demand for safe-haven assets.
The greenback has benefited from safety buying since the start of the week, when investors fretted that President Joe Biden's fiscal spending package will not be as large as the proposed $1.9 trillion.
At the same time, COVID-19 vaccine rollouts globally have been running into trouble. In Europe, production delays have snowballed into a spat between the European Union and drugmakers over how best to direct the limited supplies available.
"The caution in the market's mind hasn't gone away," said Shusuke Yamada, a currency strategist at Bank of America in Tokyo. "The dollar and other haven currencies will see some demand for the time being."
"The more medium-term question is what U.S. fiscal policy will do to U.S. interest rates, Fed policy, and therefore the U.S. dollar," he added.
The dollar index =USD gained 0.2% to 90.757 in the Asian day, bringing its weekly rise to 0.6%.
The greenback advanced 0.3% to 104.52 yen JPY=EBS , another traditional safe-haven, adding to the previous day's gains of about 0.2%.
The euro EUR=EBS declined 0.2% to $1.20955. The U.S. currency, as measured by the dollar index, has broadly rebounded since dipping to three-year lows at the start of this month on the view that last year's decline ran too far too fast.
However, many analysts expect the greenback to return to the downward trend that saw it lose nearly 7% of its value last year as the new U.S. government implements massive fiscal spending while the Federal Reserve maintains its ultra-easy monetary policy.
"The overall trend does reflect these supply issues around the U.S. dollar," said Michael McCarthy, chief strategist at CMC Markets in Sydney.
"Wide expectations of that huge issuance that's coming and the support of the Fed mean that we're looking in the medium-term for further U.S. dollar weakness."
======================================================== Currency bid prices at 1:36PM (436 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.2098 $1.2121 -0.19% -0.98% +1.2125 +1.2096 Dollar/Yen JPY=D3 104.4900 104.2100 +0.29% +1.19% +104.5570 +104.2750 Euro/Yen EURJPY= 126.43 126.35 +0.06% -0.39% +126.6200 +126.3300 Dollar/Swiss CHF=EBS 0.8898 0.8887 +0.13% +0.58% +0.8901 +0.8887 Sterling/Dollar GBP=D3 1.3702 1.3724 -0.17% +0.28% +1.3729 +1.3696 Dollar/Canadian CAD=D3 1.2866 1.2829 +0.31% +1.06% +1.2870 +1.2819 Aussie/Dollar AUD=D3 0.7640 0.7676 -0.46% -0.67% +0.7682 +0.7637 NZ NZD=D3 0.7153 0.7175 -0.29% -0.38% +0.7177 +0.7153 Dollar/DollarAll spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
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