- "The overall trend does reflect these supply issues around the US dollar," said Michael McCarthy, chief strategist at CMC Markets in Sydney.
TOKYO: The dollar edged higher on Friday, heading for a weekly gain, as lingering jitters about a coordinated assault on hedge fund short positions in the United States boosted demand for safe-haven assets.
The greenback has benefited from safety buying since the start of the week, when investors fretted that President Joe Biden's fiscal spending package will not be as large as the proposed $1.9 trillion.
At the same time, COVID-19 vaccine rollouts globally have been running into trouble. In Europe, production delays have snowballed into a spat between the European Union and drugmakers over how best to direct the limited supplies available.
"The caution in the market's mind hasn't gone away," said Shusuke Yamada, a currency strategist at Bank of America in Tokyo. "The dollar and other haven currencies will see some demand for the time being."
"The more medium-term question is what US fiscal policy will do to US interest rates, Fed policy, and therefore the US dollar," he added.
The dollar index gained 0.2% to 90.757 in the Asian day, bringing its weekly rise to 0.6%.
The greenback advanced 0.3% to 104.52 yen, another traditional safe-haven, adding to the previous day's gains of about 0.2%.
The euro declined 0.2% to $1.20955.
The US currency, as measured by the dollar index, has broadly rebounded since dipping to three-year lows at the start of this month on the view that last year's decline ran too far too fast.
However, many analysts expect the greenback to return to the downward trend that saw it lose nearly 7% of its value last year as the new US government implements massive fiscal spending while the Federal Reserve maintains its ultra-easy monetary policy.
"The overall trend does reflect these supply issues around the US dollar," said Michael McCarthy, chief strategist at CMC Markets in Sydney.
"Wide expectations of that huge issuance that's coming and the support of the Fed mean that we're looking in the medium-term for further US dollar weakness."