The US dollar drifted higher on Friday after three straight days of losses, and riskier currencies fell, as bleak non-US economic data gave global equity markets reason to pause after another week of record highs.
As a safe haven, the US currency tends to rise in times of financial and economic stress that results in lower risk appetite.
The S&P 500 and the Dow Jones Industrial Average along with US Treasury yields were lower as well, suggesting a generally somber mood in financial markets.
The US dollar did pare gains and riskier currencies cut losses earlier after upbeat US economic data — a rise in factory activity to its highest in more than 13 years this month and an unexpected 0.7 percent gain in existing home sales.
The greenback had fallen against a basket of currencies for the past three sessions as market optimism about new US President Joe Biden’s fiscal stimulus plans prompted traders to seek riskier assets, producing gains in currencies such as the New Zealand and Australian dollars.
However, that trend paused on Friday, as market sentiment pulled back.
Global shares slipped off record highs as the US dollar steadied, up 0.1 percent on the day at 90.21.
However, the dollar index still posted its biggest weekly loss since the middle of last month, falling 0.6 percent.
The US Federal Reserve would next week 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 that British retailers struggled to recover last month.
In Taipei, the New Taiwan dollar fell against the greenback, losing NT$0.008 to close at the day’s low of NT$28.381, but rose 0.3 percent for the week.
In afternoon trading, the US dollar rose 0.3 percent against the yen to ￥103.815, little changed for the week.
Data from Japan overnight showed factory activity slipped into contraction this month and the services sector was more pessimistic as emergency measures to combat a COVID-19 resurgence dampened sentiment.
The Australian dollar fell after disappointing retail sales data, but still posted weekly gains. It was down 0.6 percent at US$0.7718.
The New Zealand dollar was down about 0.6 percent at 0.7179 versus the US dollar.
The euro was little changed at US$1.2167, up 0.8 percent for the week. The single currency rose on Thursday after the European Central Bank’s policy rate announcement, with the bank saying it might not need to use its full asset-purchase envelope.
The Norwegian krone was hurt by lower commodity prices on Friday, slumping 1.1 percent against the US dollar to 8.4940.
Additional reporting by CNA, with staff writer
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