NEW YORK LONDON, Nov 19, Reuters -- The dollar went up on Friday as investors sought safe havens after Austria said it would be the first country in western Europe to impose a full lockdown amid the growing COVID 19 infections, and Germany said it could follow suit.
The dollar index, which tracks the dollar against a basket of six major currencies, was up 0.357% at 95.903, close to its 16 month high of 96.266 hit on Wednesday. The dollar was on track for a weekly gain of around 1%.
The euro, which has been on the back foot for a long time, hit a 16 month low amid the COVID surge in Europe and expectations that interest rates will be hiked faster elsewhere, particularly in the United States.
Commodity-linked currencies, such as the Australian, New Zealand, and Canadian dollars, have declined, as they are often seen as risky.
Fiona Cincotta, senior financial markets analyst at City Index said the dollar is capitalizing on risk-off flows.
On top of a lock down, Austria also said it will require all citizens to bevaccinated against COVID - 19 from Feb. 1, while Germany's health minister cautioned that lockdown restrictions could return there.
If the whole of Europe had to go under lock down once more, we would need to rethink our growth scenarios, according to Stephane Ekolo, global equity strategist at brokerage Tradition.
The euro has declined more than 1% this week against the dollar, and was down 0.61% on the day at $1.13055, its lowest since July 2020.
On Friday, European Central Bank President Christine Lagarde said that the ECB should not tighten policy as it could undermine the recovery.
Expectations are that the dollar can strengthen further into next year as U.S. economic data, including retail sales numbers, has been surprising to the upside, while inflation has been hotter than expected.
In an outlook report, analysts at UBS said that a combination of Fed tapering and slowing global growth should favor the U.S. dollar in 2022.
The Aussie was down 0.32% at $0.72525 and the Kiwi was 0.47% lower at $0.7013.
The Japanese yen, which is considered a safe-haven currency, was strengthened last up 0.35% versus the dollar at 113.85 yen after Austria's lock down announcement.
The pound was down 0.37% at around $1.3449 after some of its recent gains.
In cryptocurrencies, last trading around $58,000 was below $60,000 and set for its worst week in six months.