By Gina Lee
Investing.com – The dollar was slightly up on Monday morning in Asia, holding onto gains seen at the end of the previous week, as investors turned to the safe-haven asset amid disappointing U.S. economic data and the rising number of COVID-19 cases.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.05% to 90.800 by 10:46 AM ET (3:46 AM GMT), staying near a one-month high of 90.887 seen earlier in the session.
The euro, which saw a surge in 2020, has slipped more than 2% in 2021 and touched a six-week low over ever-increasing COVID-19 cases and an Italian political crisis that is casting doubts over the region’s economic recovery.
The USD/JPY pair inched down 0.10% to 103.77. The risk-adverse mood also supported the safe-haven yen against other majors.
The AUD/USD pair edged down 0.12% to 0.7692, a one-week low, and the NZD/USD pair edged down 0.13% to 0.7128, a three-week low.
The USD/CNY pair inched up 0.09% to 6.4858. Chinese industrial production grew 7.3% year-on-year in December, above the 6.9% in forecasts prepared by Investing.com, and the 7% growth seen in November, according to data released earlier in the day.
The data also showed that GDP rose 6.5% year-on-year in the fourth quarter, above the forecast 6.1% growth but below the 4.9% growth in the third quarter. The GDP also grew 2.6% quarter-on-quarter, this time below the forecast 3.2% and the 2.7% growth seen during the previous quarter.
The GBP/USD pair inched down 0.08% to 1.3575.
Meanwhile, investors are also digesting U.S. economic data released on Friday. The data showed that core retail sales contracted 1.4% month-on-month in December, larger than the 0.1% contraction in forecasts prepared by Investing.com and the 1.3% contraction recorded in November.
The dollar has been supported by the Democrat victories in the runoff Senate elections in the state of Georgia earlier in the month, which saw a surge in U.S. yields as Democrats gained control of the Congress and investors see fewer resections on a borrow-and-spend administration.
U.S. President-Elect Joe Biden and his administration are also due to be inaugurated in a heavily guarded ceremony on Wednesday. Alongside the risk that supporters of incumbent President Donald Trump will perpetrate further violence in the runup to the inauguration, investors are also beginning to question how much of the $1.9 trillion stimulus measures proposed by Biden during the previous week will make it through Congress.
Incoming Treasury Secretary Janet Yellen is also reportedly expected to rule out seeking a weaker dollar when she testifies on Capitol Hill on Tuesday.
Some investors remained cautious, however.
“Optimism is being challenged as the reality of a tough few months is upon us,” ANZ analysts warned in a note to clients.
“The near-term outlook for consumption, the main driver of economic growth, is poor.”