Shafaq News/ The dollar steadied in a cautious Asia session on Friday but it is set to log its worst week of the year as investors welcomed the Joe Biden administration by seeking out riskier assets.

Against the Japanese yen, the dollar has fallen 0.3% this week and it has shed 0.8% against the euro, the largest weekly percentage drops since mid-December.

The dollar last traded steady at $1.2172 per euro and bought 103.54 yen. It advanced a little against the Australian and New Zealand dollars but not enough to derail weekly gains for the Antipodeans, of 0.6% for the Aussie and 0.9% for the kiwi. 

Biden, whose Democratic Party controls the U.S. Congress, is seeking to borrow and spend to support the economy. The anticipation of stimulus has driven equities to record highs, while inflation expectations have held real yields in check.

Central banks from Tokyo to Frankfurt, Ottawa and Oslo have also this week left policy settings untouched and begun to cautiously talk up recovery prospects, while the U.S. Federal Reserve looks committed to low rates for a very long time.

The Canadian dollar slipped 0.2% to 1.2671 per dollar with a dip in oil prices on Friday, but it is 0.5% higher this week and hit an almost three-year high on Thursday after the Bank of Canada surprised some traders by not trimming rates.

Sterling eased 0.2% from Thursday’s 2-1/2 year peak to sit at $1.3707. It is supported by the hope that coronavirus vaccinations can underpin an economic recovery later in the year. [GBP/]

The dollar’s losses this week might call time on the bounce that has carried the dollar index about 1% above the three-year trough it touched in the first trading week of 2021, and settle the greenback into a downward trend once more.

The index was flat on Friday at 90.110 and 0.7% lower for the week. Forecasts for dollar weakness are widely held, and crowds are betting against the greenback, with the value of dollar shorts hitting an almost ten-year high last week.

Source: Shafaq News Agency + Reuters