The US dollar on Friday rose against major currencies such as the euro and yen, with traders consolidating positions amid competing forces that are pulling the currency in different directions: the surge in COVID-19 cases, on the one hand, and positive vaccine news, on the other.
The possible resumption of US stimulus talks for COVID-19 relief has also weighed on the US dollar as a safe haven.
Republican and Democratic senators on Thursday agreed to revive those discussions.
Overall, the greenback ended the week on a loss against a basket of currencies.
The week started off on a negative note for the US dollar with positive news on a vaccine for COVID-19, but the market has since moved back and forth between focusing on COVID-19 cases and the virus vaccine.
Pfizer Inc said that it has applied for emergency use authorization in the US for its COVID-19 vaccine.
“We think we are in the early stages of a recovery in the global economy and trade from the shock of the pandemic, and this will further weigh on the dollar and support the euro,” said Jonathan Petersen, a markets economist at Capital Economics.
Meanwhile, US Secretary of the Treasury Steven Mnuchin on Friday defended his decision to end several of the Federal Reserve’s key pandemic lending programs on Dec. 31, saying that the US Congress should use the money to help small US companies with grants instead.
The US dollar briefly rose overnight after the Mnuchin news late on Thursday.
“The request comes as most lending facilities haven’t been tapped for more than the amount committed by the Treasury to backstop the programs, suggesting market functionality is sufficient to warrant their expiration,” Monex Europe said in a research note.
In afternoon trading, the US dollar was flat against basket of currencies at 92.369 in a quiet day for currency markets.
In Taipei, the New Taiwan dollar lost NT$0.002 against the greenback, to close at the day’s low of NT$28.820. For the week, the NT dollar gained 0.09 percent against the US dollar.
The euro was down 0.1 percent against the greenback at US$1.1859, posting a small weekly gain. Action Economics noted some pre-weekend selling in the euro going into the London close.
“The lack of progress between the European Union and the UK on Brexit trade talks has likely kept a cap on the euro, despite generally waning US dollar sentiment,” it said in its daily blog.
The US dollar was up 0.1 percent versus the yen at ￥103.85.
Additional reporting by CNA, with staff writer.
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