SINGAPORE- The dollar began a week full of big economic data on a firm footing, with investors wary of the Federal Reserve beginning its exit from super-supportive policy even as cases of the coronavirus surge.
The greenback closed out its best week in three weeks on Friday, gaining about 0.6 percent on the euro as it benefited both from safety flows and the policy outlook lifting yields on US Treasuries.
It maintained gains early in the Asia session to hold the common currency at $1.1810. It was also steady at 109.91 Japanese yen, while its strength has for now stymied rallies in the Australian and New Zealand dollars.
In morning trade, the Aussie was marginally firmer at $0.7362, but it has struggled to stay above $0.74. The kiwi was marginally weaker at $0.7115 but has likewise battled to break out of a months-long range despite the Reserve Bank of New Zealand preparing for interest rate hikes.
“A couple of dynamics favor the dollar,” said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney, particularly risk aversion as even vaccinated countries such as Singapore and Britain log surges in COVID-19 cases.
“Re-opening still faces challenges from the consumer, who is cautious and from bottlenecks which restrict ability for the economy to rebound with some gusto,” he said.
