Dollar Edges Higher, But Set to Record Losing Week

The dollar edged higher in early European trading Friday, but still heading for its first weekly loss in three as doubts emerge about the strength of the U.S. economic recovery.

At 3:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 90.487, but still on track to fall 0.6% this week.

USD/JPY was up 0.2% at 104.88, EUR/USD dropped 0.1% to 1.2125, while the risk-sensitive AUD/USD rose 0.1% to 0.7746.

The weekly initial jobless claims data came in weaker-than-expected on Thursday, adding to last week’s nonfarm payrolls number that suggested that the recovery in the jobs market in the U.S. would be a prolonged affair.

Federal Reserve Chairman Jerome Powell admitted as much on Wednesday, when he stated that the central bank would have to remain patient with its accommodative monetary policy stance. This has all created concerns that the dollar’s previous rally had priced in too fast a pace of rebound for the U.S. economy.

Elsewhere, GBP/USD dropped 0.2% to 1.3786, after the release of data showing Britain’s economy shrank 9.9% in 2020. This was the biggest annual fall in output since modern records began as the coronavirus ravaged its services-dominated economy.

That said, Britain’s gross domestic product grew 1.0% in the final quarter of last year, double the 0.5% growth widely expected.