Dollar Heads for Weekly Loss as Taper Fears Ebb

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SINGAPORE, May 21 Reuters The dollar hovered around recent lows on Friday and was set to notch a modest weekly drop as traders concerns at taper talk in Federal Reserve minutes faded, though a pullback in commodity prices and nerves about virus outbreaks kept losses in check.

The dollar has given back a bounce it made after a mention of possible future tapering discussions, in minutes from the Feds April meeting, prompted fears of early rate rises.

Investors now figure that any action remains a long way away and that the path might again be clear for a resumption of Aprils downtrend as the U.S. trade and account deficits weigh.

Against the euro the dollar was parked at 1.2230, not far above the fourmonth low 1.2245 it hit earlier in the week and close to testing major support around 1.2345. The dollar index was held below 90 and was last at 89.777.

The index, which measures the greenback against six major currencies, is down about 0.6 for the week so far. Against the Japanese yen the dollar held at 108.74, for a weekly loss of roughly 0.5.

It has been just over 24 hours since markets got spooked by the prospect of the U.S. Fed tapering its asset purchases, but having proverbially slept on it, the mood seems less sour, ANZ analysts said in a note. Which seems reasonable its not like the Fed is on the brink of wanting to actually act.

SHADOW OF A DOUBT

Lingering doubts about the Fed as well as worry about new COVID19 outbreaks and curbs to contain them in…

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