FOREX-Dollar inches up after three-day losing streak; risk currencies fall

* Dollar index edges up
* Aussie and Kiwi dollar fall
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

(Updates throughout, adds comment)
By Elizabeth Howcroft
LONDON, Jan 22 (Reuters) - The dollar edged slightly higher
on Friday after three straight days of losses, and riskier
currencies fell, as bleak economic data gave global equity
markets reason to pause after another week of record highs.
The dollar had fallen against a basket of currencies for the
past three sessions as market optimism about U.S. President Joe
Biden's fiscal stimulus plans prompted traders to seek riskier
assets, producing gains in riskier currencies such as the New
Zealand and Australian dollar.
But that trend paused on Friday as market sentiment pulled
back, global shares slipped off record highs and the U.S. dollar
steadied, up less than 0.1% on the day at 90.147 at 1206 GMT.
The dollar index was still on track for its biggest weekly
loss since mid-December.
“The dollar's generally stronger because the S&P made a new
high yesterday and then paused, and Asian equity markets were
all lower," said Kit Juckes, head of FX strategy at Societe
Generale.
"In the near-term, the underlying driver of everything is
the dollar's weak because capital is attracted to places that
are boosted by vaccines, boosted by easy Fed policy and indeed
helped by how low U.S. rates are," he said.
But, "in a week when you've had equities rallying, risk-on,
dollar soft, Fridays are a little bit like a soufflé that rather
gives in a little bit, or a lot," he added.
The Australian dollar fell after disappointing retail sales
data, but was still set for a weekly rise. At 1214 GMT, it was
down 0.7% on the day at 0.7711 AUD=D3 . The New Zealand dollar was down around 0.6% at 0.7178 versus
the U.S. dollar NZD=D3 .
Gloomy economic data did little to brighten the mood, as UK
data showed British retailers struggled to recover in December.
Economic activity in the euro zone shrank markedly in
January as stringent lockdowns to contain the coronavirus
pandemic hit the bloc's dominant service industry hard.
Data from Japan overnight showed that factory activity
slipped into contraction in January and the services sector was
more pessimistic as emergency measures to combat a COVID-19
resurgence hit sentiment. "Despite the positive vaccine news, lifting the mood from a
market point of view, it is clear that there will be no similar
uptick in economic activity until such times as restrictions
start to get eased, perhaps sometime in Q2," Michael Hewson,
chief market analyst at CMC Markets UK said in a note to
clients.
At 1219 GMT, the euro was flat on the day against the
dollar, at $1.2172 EUR=EBS .
The euro appreciated somewhat on Thursday after the European
Central Bank's policy rate announcement, as the bank said it may
not need to use its full asset-purchase envelope. President Christine Lagarde also said that the bank was
"very carefully" monitoring the euro exchange rate.
The Norwegian crown was hurt by lower commodity prices, down
more than 1% against the euro at 10.3275 EURNOK=D3 .

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