By Gina Lee
Investing.com – The dollar was down on Friday morning in Asia, as investors continue to celebrate the Joe Biden administration's inauguration by turning to riskier currencies. There were also renewed bets that an economic recovery from COVID-19 could push the dollar even lower.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.02% to 90.112 by 12:07 AM ET (5:07 AM GMT).
Sentiment-driven moves have eroded the dollar’s gains since the Democrats won control of the U.S. Congress earlier in the month. The dollar had risen along with U.S. Treasury yields on expectations of more stimulus measures and government borrowing under the Joe Biden administration.
“It’s pretty hard to run away from the enduring strong negative correlation between U.S. equity performance and the U.S. dollar” as stock market sentiment spills over, National Australia Bank (OTC:NABZY) head of FX strategy Ray Attrill told Reuters.
“I think the market is far happier focusing on the potential positives of the Biden administration’s proposed fiscal plans...rather than any of the negatives … for the time being, while it seems to be onwards and upwards for stocks, it’s put the dollar back on the back foot,” he added.
The USD/JPY pair inched up 0.09% to 103.57.
The AUD/USD pair was down 0.24% to 0.7744 the NZD/USD pair was down 0.25% to 0.7194.
The USD/CNY pair edged up 0.14% to 6.4687.
The GBP/USD pair edged down 0.16% to 1.3710. The pound saw a two-and-a-half year high during the previous session over hopes that the U.K.’s COVID-19 vaccine roll-out could see a rebound in economic growth.
The European Central Bank kept policy steady and accommodative as it handed down its policy decision on Thursday, which lent the euro some support. The dollar was down almost 0.8% against the euro during the week and touched a week-low of $1.2173 per euro earlier in the session.
Scandinavian currencies have seen gains with the Swedish crown up 1.4% for the week. The Norwegian crown was up 1.8% for the week, boosted by Norges Bank’s decision to hold its policy rate steady, albeit at zero, earlier in the week.
Meanwhile, a heavy Bitcoin selloff saw the cryptocurrency slump 5% to an almost three-week low of $28,800 earlier in the session.
On the data front, the European Union, the U.K. and the U.S. will release purchasing managers’Manufacturing PMI index figures later in the day.