Dollar snaps 3-day losing streak as selling pressure abates

New York

The US dollar snapped a 3-day losing streak on Friday (Jan 14) as the recent selling spree driven by the view that Federal Reserve tightening moves were largely priced in abated, and as weaker risk appetite in financial markets led investors to shun riskier currencies.

The greenback, which rose more than 6 per cent against a basket of currencies in 2021, came under pressure despite Fed chair Jerome Powell saying that the US economy is ready for the start of tighter monetary policy and data showing the largest annual rise in inflation in nearly 4 decades.

Hedge fund dollar positioning that is close to the highest levels since early 2020 has added to the selling pressure on the dollar last week, analysts said.

US retail sales dropped by the most in 10 months in December.

On Friday, the dollar struggled to advance against the Japanese yen, with the US currency falling 0.02 per cent to more than a 3-week low of 114.15 yen.

The safe-haven Japanese currency has benefited from the recent souring of risk sentiment in global financial markets.

Bank of Japan policymakers are debating how soon they can start telegraphing an eventual interest rate hike, which could come even before inflation hits the bank's 2 per cent target, Reuters reported on Friday.

With global stock markets under pressure on Friday and Treasury yields higher, the Australian dollar, seen as a liquid proxy for risk appetite, fell 0.99 per cent to a 2-day low.

Sterling was 0.22 per cent lower against the dollar as investors assessed the impact of a potential leadership change in the country as UK Prime Minister Boris Johnson faces the gravest crisis of his premiership after revelations about a series of gatherings in Downing Street during Covid-19 lockdowns. REUTERS