Early trade in New York: Dollar gets boost as risk sentiment sours

NEW YORK: The greenback bounced on Friday as concerns over delayed US fiscal stimulus amid a surge in Covid-19 cases and the increasing likelihood that Britain will exit the European Union without a deal dented risk appetite.

Overnight, hopes of a global economic rebound and a fading pandemic in 2021 saw investors taking bets on riskier currencies linked to rising commodity prices such as the Australian and Canadian dollars, both of which hit more than two year highs.

But sentiment worsened as investors turned attention back to the prospect of more business closures to stem the spread of Covid-19 and continued volatility from Brexit.

The dollar index against a basket of major currencies was last up 0.20% at 90.936. It is trading just above a two-and-a-half-year low of 90.471 reached on Dec. 4.

Sterling dipped 0.66% to $1.3211 and bets on further volatility in the currency grew as a disorderly Brexit appeared more likely. The euro also retreated against the dollar, losing 0.16% to $1.2122 after Thursday's gains, when the European Central Bank announced a new round of stimulus in line with market expectations.