TOKYO- The dollar held ground against riskier currencies on Monday as weak economic data from Europe and fresh worries about the coronavirus supported investor demand for safehavens, stretching greenback selling positions.
Economic activity in the euro zone shrank markedly in January as stringent lockdowns to contain the coronavirus pandemic hit the bloc’s dominant service industry hard while UK data showed British retailers struggled to recover in December.
British Prime Minister Boris Johnson also said on Friday there was evidence a new variant of COVID-19 discovered late last year could be associated with higher mortality.
The news came as bets against the dollar have become overcrowded, analysts said, with US data on Friday showing net dollar short positions swelling to the largest since May 2011.
The dollar index stood at 90.247, flat on the day but off last week’s low of 90.043 set on Thursday.
The euro was also little changed at $1.2163, taking a pause after a 0.8 percent gain last week.
The common currency is capped in part by signs of political instability in Rome.
Italian bond yields rose with spreads over German Bunds hitting their highest since November amid a political impasse for Prime Minister Giuseppe Conte who has so far failed to drum up a ruling majority in Italy’s parliament.
Conte appealed to centrist and unaligned upper house lawmakers outside the coalition to join his minority government’s ranks but few have responded.