FOREX-Dollar rises as disappointing U.S. data sours risk appetite

* Dollar higher across the board
* Pound knocked by sour market mood

(New throughout, updates prices, market activity, comments to
U.S. market open; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Jan 15 (Reuters) - The U.S. dollar rose across the
board to hit a near four-week high against a basket of
currencies on Friday, as economic data showing the COVID-19
pandemic's continuing toll on the economy boosted demand for the
safe-haven currency.
Data on Friday showed U.S. retail sales fell for a third
straight month in December amid job losses and renewed measures
to slow the spread of COVID-19, further evidence that the
economy lost speed at the end of 2020. The weak data dragged U.S. Treasury yields lower and U.S.
stocks fell as investors turned more risk-averse on Friday.
"I feel that after all the optimism regarding vaccines, we
are now living the reality of a very slow rollout, which is
weighing heavily on business activity," said Juan Perez, senior
currency trader at Tempus Inc in Washington.
"Until we have more guarantees on the medical front, markets
will not continue to flourish despite whatever financial aid may
be on the way," Perez said.
President-elect Joe Biden on Thursday revealed a nearly $2
trillion proposal to address the economic harm from the COVID-19
pandemic that included $20 billion for vaccine distribution and
$50 billion for testing. It builds on the $982 billion COVID
relief bill passed in December, more than tripling the funding
allocated to state and local governments for vaccine
distribution. The U.S. Dollar Currency Index =USD was 0.50% higher at
90.721, on pace to finish the week up 0.7%, its best weekly
showing in 11 weeks.
Rising coronavirus infections also curbed 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 virus variants after Germany had a record number of deaths.
The dollar's rebound from three-year lows, which began last
week, may have some more room to run if the state of the economy
worsened, but the currency's longer-term outlook remained weak,
analysts said.
"While short-term, the U.S. dollar could extend further, the
big-picture backdrop for the dollar remains negative," MUFG
currency strategist Derek Halpenny wrote in a note to clients.
The Australian dollar AUD= - seen as a liquid proxy for
risk - was down around 1%.
The deteriorating global risk backdrop sent sterling
GBP=D3 0.7% lower though data showing Britain's November
lockdown was less damaging for the economy than expected kept a
floor under the currency. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: World FX rates https://tmsnrt.rs/2RBWI5E
GRAPHIC: Citigroup Economic Surprise Index https://tmsnrt.rs/3qlS8tg
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