NEW YORK, 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 due to the surging COVID 19 infections, and Germany said it could follow suit, sending the euro lower.
The dollar index, which tracks the dollar against a basket of six major currencies, is up 0.489% at 96.029, close to the 16 month high of 96.266 hit on Wednesday. The dollar was up around 1% for the week.
The euro, which has been on its back foot since the beginning of the week, 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.
Federal Reserve Governor Christopher Waller said the central bank should speed up the pace of its bond purchases to give more leeway to raise interest rates from near zeroo levels sooner than expected if high inflation and the strength of job gains persist.
At a separate event, Fed Vice Chair Richard Clarida said it may be appropriate to talk speeding up the Fed's asset purchase wind-down when it meets on December 14 - 15.
Joe Manimbo, senior market analyst at Western Union Business Solutions said that the dollar is benefiting from signs of a strengthening U.S. economy and from safe-haven flows due to renewed worries about the virus.
Austria said it will require all citizens to be vaccinated 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.
Commodity-linked currencies such as the Australian, New Zealand and Canadian dollars, which are often seen as risky, all declined.
The euro was down 0.74% on the day at $1.12895, having earlier touched $1.1248, its weakest level since July 2020, and has fallen more than 1% this week against the dollar.
On Friday, European Central Bank President Christine Lagarde said that the ECB should not tighten policy as that could undermine the recovery.
The Aussie was down 0.58% at $0.72335 and the Kiwi was 0.72% lower at $0.69945.
The Japanese yen, considered a safe-haven currency, strengthened after Austria's lock-down announcement and was up 0.22% versus the dollar at 113.99 yen.
The pound was down 0.39% to around $1.3448 after a few of its recent gains.
The last time it traded around $58,000 was when the price of cryptocurrencies was below $60,000 and set for its worst week in six months.