Feb 04, 2022 03:06AM ET
The U.S. dollar weakened on Friday as strong gains in U.S. stock futures undermined the need for a safe haven and supported the single currency after a hawkish turn by the European Central Bank.
At 2:55 a.m. EDT, the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 95.285, having fallen about 2% this week, its biggest weekly decline since March 2020.
Strong corporate results from internet retail giant Amazon after Thursday's closing bell on Wall Street spurred strong gains in U.S. stock futures, as well as equity markets in Asia and Europe. That increased confidence hit demand for the greenback, which is often seen as a safe haven in times of tension.
The currency that has benefited the most is the euro, with the EUR/USD exchange rate up 0.2% to 1.1456 and on track for its best week since March 2020.
Yet the main reason for the euro's gains was ECB President Christine Lagarde's press conference after the central bank's meeting, where she acknowledged rising inflation risks and refused to repeat previous guidance that an interest rate hike this year was extremely unlikely.
Goldman Sachs now expects the European Central Bank to raise interest rates by 25 basis points each in September and December.
The release of US non-farm payrolls data later on Friday could influence this thinking, but given the focus, rather on inflation, the sharp slowdown in job growth in January due to the extension of the Omicron Covid-19 option is unlikely to move the dollar much.