By Gina Lee
Investing.com – The dollar was up on Friday morning in Asia but slid through major support levels and was headed towards its worst week in a month.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.15% to 89.817 by 9:24 PM ET (2:24 AM GMT).
The dollar down 1.2% for the week so far and has fallen 12.7% from a three-year peak in March, falling to 89.862, just above a two-and-a-half year low seen on Thursday, earlier in the session. With investors turning to risky assets throughout the week, the dollar saw multi-year lows against the euro, pound, AUD, NZD and Canadian dollar.
News about vaccine rollouts, as well as progress on both Brexit trade talks and the latest U.S. stimulus measures, over the past week only increased bearish sentiment, after short positions in the dollar shot up to just below nine-year highs during the previous week.
Some investors remained pessimistic about the dollar’s prospects.
“It’s a perfect combination that is besieging the dollar at the moment,” National Australia Bank (OTC:NABZY) senior currency strategist Rodrigo Catril told Reuters, with U.S. rates anchored low and better returns expected elsewhere.
“For now, the narrative of global growth and broadening of the recovery favors risk-sensitive currencies like the AUD and the NZD, and more of the same is to be expected in 2021,” he said.
The USD/JPY pair edged up 0.18% to 103.29. The Bank of Japan will hand down its policy decision during the day, which is widely expected to leave rates steady but announce an extension of a package of steps aimed at easing corporate funding strains.
The AUD/USD pair edged down 0.12% to 0.7611.
The NZD/USD pair inched down 0.06% to 0.7144. The NZD rose to a two-and-a-half year high of $0.7170 Thursday after New Zealand released better-than-expected national growth data. The country’s GDP grew 14% quarter-on-quarter during the third quarter, exceeding the 13.5% growth in forecasts prepared by Investing.com and the 11% contraction reported for the second quarter.
Some investors remained optimistic as the NZD recorded an eighth consecutive week of growth, the longest run of weekly rises in three years.
“If we get a U.S. fiscal deal and a Brexit deal before Christmas, there will be nothing stopping the NZD,” ANZ analysts said in a note.
The USD/CNY pair edged up 0.12% to 6.5397.
The GBP/USD pair was down 0.24% to 1.3550. The pound was slightly down from the 31-month high overnight as both the U.K. and European Union expressed doubt that an agreement could be reached for their post-Brexit trade deal. However, some investors were betting that the warnings are just more brinkmanship on the way to a deal.
The euro was headed towards a high of $1.2556 not seen since 2018 and was trading at $1.2254 after minor profit taking on Friday.The common currency has added nearly 3% in the three weeks after pushing through stiff resistance at $1.2000.
Elsewhere in Europe, the Norwegian crown surged 1.4% higher on Thursday. Norges Bank kept interest rates unchanged in its policy decision handed down on the same day but said that a COVID-19 vaccine-driven economic recovery could prompt rate hikes early in 2022 or even sooner.