"The new spending is an upside to growth and could lead to the Bank of Canada raising rates earlier or faster than otherwise," Adam Cole, chief currency strategist at RBC Capital Markets in London, said in a note.
The safe-haven greenback got some respite from a pullback in world stocks from record highs as flare ups in coronavirus infections from India to Canada soured the outlook for a quick global recovery.
Organisers were set to allow 20,000 fans into the May 9 meet, according to Kyodo news agency, but tougher restrictions imposed by the Tokyo city government this month have forced a rethink.
Maharashtra, home to India's financial capital Mumbai and the country's most industrial state, has been the country's worst hit state, accounting for about a quarter of its 13.5 million cases.
The STOXX 600 has also lagged a recovery in its U.S. counterpart due to a slow vaccination rollout and a new wave of coronavirus infections on the continent.
Moody's also echoed concerns raised by Barclays that a shortage of vaccines and India's population of nearly 1.4 billion could slow progress of the vaccine rollout.
Cases have soared since the government eased measures to curb the pandemic in early March, and daily cases rose to a record high of 55,941 on Thursday.
Germany is struggling to tackle a third wave of the pandemic and several regional leaders have called for a short, sharp lockdown while the country tries to vaccinate more people.
Despite a slow vaccine roll-out and a surge in reported coronavirus infections, optimism about the year ahead improved. The composite future output index rose to 67.9 from 67.0, its highest since February 2018.
Bangkok authorities earlier this week closed 196 entertainment venues in three districts of Bangkok for two weeks after clusters emerged where more than 250 people were infected with the coronavirus.