After three straight days of losses, the dollar stabilised on Friday and riskier currencies lost out as the recent equity market rally paused for breath, with business activity data in focus.
The dollar had fallen against a basket of currencies for the past three sessions as market optimism about U.S. President Joe Bidens fiscal stimulus plans prompted traders to seek riskier assets, with the New Zealand and Australian dollar gaining.
But that trend paused on Friday as market sentiment pulled back, global shares slipped off record highs and the U.S. dollar steadied, flat on the day at 90.118 at 0840 GMT. The dollar was still on track for its biggest weekly loss since midDecember.
Flash PMI readings for January from around the world will be closely watched by investors for indications about the pace of the global economic recovery. Investors have been tracking vaccinations, while much of Europe brought in tighter lockdowns at the start of the year to combat a resurgence in COVID19. .
Despite the positive vaccine news, lifting the mood from a market point of view, it is clear that there will be no similar uptick in economic activity until such times as restrictions start to get eased, perhaps sometime in Q2, Michael Hewson, chief market analyst at CMC Markets UK said in a note to clients.
On the plus side manufacturing has been a strong performer for both Germany and France, helping to offset some of the slowdown in other parts of their economies, he added.