FOREX-Dollar On Track For Weekly Gain Amid Virus Problems

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* Chart: Global exchange rates https://tmsnrt.rs/2RBWI5E

By Iain Withers

LONDON, July 16 (Reuters) – The dollar was heading for a weekly gain on Friday, supported by investor drift to safety as an increase in COVID-19 infections loomed during the pandemic recovery.

The dollar index, which tracks the greenback against major currencies, is on track for a 0.5% gain this week, which would be close to its biggest weekly gain in about a month. It was broadly stable for the day at 92.530.

Strong US data and a shift in interest rate expectations after the Federal Reserve signaled earlier-than-expected hikes in 2023 in June put a floor below the greenback over the past month and made investors nervous about selling it short.

The gains came despite Fed Chairman Powell reiterating on Thursday that the rise in inflation was likely transitory and the US central bank would continue to support the economy.

“It is clear that the US dollar has some power behind it,” said Imre Speizer, Westpac strategist. “And I think that’s holding back all the majors.”

“There is an interest rate side to this,” he said. “And sometimes it’s a safe haven offering… we think the US dollar is going to be pretty strong over the next few months.”

Traders will be watching US retail sales figures for June due later this session and look for any reading on inflation and the strength of the recovery.

“This will be a crucial determinant of growth going forward. As the fiscal boost from extraordinary public spending wears off, the burden of supporting the economy falls on the consumer, who may still be unemployed,” said Marshall Gittler, head of investment research at BDSwiss.

The New Zealand dollar was one of the big winners in the Asian trading session after data showed consumer prices rose much faster than expected, prompting some in the market to bet on higher prices. rate as of August.

It gained as much as 1% against the US dollar and was last up 0.7% to $ 0.70270.

Currency movements were more subdued elsewhere, with the dollar gaining about a fifth of a percent against the Japanese yen, last at 110.08 yen. The euro was broadly stable against the dollar at $ 1.18165.

Cryptocurrencies found support but were near the low end of recent ranges with bitcoin at $ 31,486.

(Reporting by Iain Withers, Additional reporting by Tom Westbrook in Singapore; Editing by Ana Nicolaci da Costa)



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