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Dollar on track for weekly gain amid virus concerns By Reuters

© Reuters. FILE PHOTO: A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao

By Iain Withers

LONDON (Reuters) -The dollar was headed for a weekly gain on Friday, supported by investors’ drift toward safety as rising COVID-19 infections loomed over the pandemic recovery.

The , tracking the greenback against other major currencies, is on course for a 0.6% gain this week, which would be its biggest weekly rise in about a month. It7 edged up 0.1% on the day at 92.700.

Solid U.S. data and a shift in interest rate expectations after the Federal Reserve flagged in June sooner-than-expected hikes in 2023 have put a floor under the greenback over the past month and made investors nervous about shorting it.

The gains came despite Fed Chair Jerome Powell reiterating on Thursday that rising inflation was likely to be transitory and that the U.S. central bank would continue to support the economy.

“Clearly the U.S. dollar has got some power behind it,” said Westpac strategist Imre Speizer. “And I think that’s holding back all the majors.”

“There’s an interest rate side to it,” he said. “And sometimes it’s a safe-haven bid … we do feel that the U.S. dollar’s going to be quite strong over the next few months.”

Traders will be watching out for U.S. retail sale figures for June due later this session and looking for any reading on inflation and the strength of the recovery.

“This will be a crucial determinant of growth in the future. As the fiscal boost from extraordinary government spending fades, the burden of supporting the economy falls on the consumer, who may well be unemployed still,” said Marshall Gittler, head of investment research at BDSwiss.

The New Zealand dollar was one of the big gainers during the Asian trading session after data showed consumer prices rose far faster than expected, prompting some in the market to bet on a rate hike as soon as August.

It gained as much as 1% versus the U.S. dollar and was last up 0.4% at $0.70080.

Elsewhere, the dollar gained around a third of a percent on the Japanese yen, last at 110.08 yen . The euro slipped 0.1% against the dollar at $1.18015.

Cryptocurrencies found support but were close to the bottom of recent ranges with bitcoin at $31,332.

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