FOREX-Dollar rises as currency markets turn risk-averse; Aussie and Kiwi fall

* Dollar index up 0.2% as Biden offers $1.9 trillion
stimulus
* COVID-19 infections rise in China
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

LONDON, Jan 15 (Reuters) - The dollar rose and riskier
currencies fell on Friday, as President-elect Joe Biden rolled
out a $1.9 trillion stimulus plan that was offset by fresh
U.S.-China tensions and a rise in COVID-19 infections in China.
The dollar index is on track for its biggest weekly gain
since November 2020, with its recent recovery from three-year
lows challenging the narrative of dollar bearishness for 2021.
Although the dollar's rebound slowed somewhat overnight
after U.S. Federal Reserve Chair Jerome Powell said "now is not
the time" to be talking about changing the Fed's asset
purchases, it picked up again as European markets opened.
At 0830 GMT, the dollar index was at 90.458 versus a basket
of currencies, up 0.2% on the day =USD . It was on track for a
weekly gain of around 0.4%, making this its strongest week since
November 2020.
Against a stronger dollar, the euro was down 0.3% at $1.2121
at 0831 GMT EUR=EBS .
President-elect Biden laid out his $1.9 trillion stimulus
package proposal on Thursday, but analysts said that the market
impact was limited by uncertainty as to how easily Democrats
will be able to get their proposals through the Senate.
"The reality is that while the Democrats now have increased
power having won the run-off elections in Georgia last week,
that power still has its limits, and the details of the fiscal
package suggest the overall size will be whittled down before it
gets the support required to get through the Senate," MUFG
currency strategist Derek Halpenny wrote in a note to clients.
"While short-term, the US dollar could extend further, the
big-picture backdrop for the dollar remains negative. Fed
rhetoric and even a watered-down Biden fiscal plan underline the
negative backdrop that lies ahead," he added.
The outgoing Trump administration ramped up tensions with
China, imposing sanctions on Chinese officials and companies,
including an investment ban on nine additional companies - moves
China said it firmly opposes. Rising COVID-19 infections also hurt risk appetite, as daily
cases in China hit their highest in more than 10 months.
France will tighten its COVID-19 border controls and bring
its curfew forward by two hours, while German Chancellor Angela
Merkel said she wanted "very fast action" to counter the spread
of COVID-19 mutations after Germany had a record number of
deaths. The Australian dollar - seen as a liquid proxy for risk -
was down around 0.5% at 0.7738 versus the U.S. dollar AUD=D3 .
The New Zealand dollar was also down on the day, by around 0.6%
NZD=D3 .
The dollar rose around 0.2% against China's offshore yuan,
with the pair changing hands at 6.477 at 0834 GMT CNH=EBS .
A vice governor at the People's Bank of China said on Friday
that China's monetary policy would provide the necessary support
for the country's economic recovery in 2021 and the central bank
would keep the yuan stable. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
dollar https://tmsnrt.rs/3qnLbrw
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>