Dollar set for worst week in a month
LONDON - The dollar was headed for its worst week in a month on Friday while the euro gained, as investors bet the US currency has further to fall and that the worst of the Covid-19 pandemic may be over within months.
A flurry of positive vaccine news has helped drive a rally in riskier currencies, while actions taken by the Federal Reserve have weakened the dollar.
The dollar index dropped to a two-and-a-half-year low of 90.504 on Thursday and is on track for a more than 1 percent fall over the week. It edged down 0.1 percent on the day at 90.578.
"It has been another bad week for the US dollar," analysts at MUFG said in a note. "It will encourage speculators tore build short US dollar positions which have been pared inrecent months."
Investors have turned short dollars, figuring rates will stay low for a long time in the United States, forcing yield-seekers to head elsewhere for better returns.
Investors will get a further indication of how the US economy is holding up at 1330 GMT, with monthly payrolls data expected to show employment growth, but at a slower pace.
The euro has been one of the biggest winners from recent dollar weakness, breaking decisively above $1.20 (R18,19) this week and is on track for a more than 2 percent weekly gain.
The single currency hit a two-and-a-half-year high of$1.21770, just above the previous day's benchmark. It was last up 0.2 percent.
"The euro is holding above the $1.21 level for the first time since spring 2018, despite the fact that there is only a week to go before the European Central Bank is expected to add more policy stimulus," said Rabobank strategist Jane Foley.
The yen was broadly steady against the dollar on Friday, while sterling jittered against the dollar and euro with Brexit trade talks between the UK and European Union at a critical stage.