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Dollar Climbs Higher On Covid Concerns, Rate Hike Bets

The U.S. dollar climbed higher against most of its major counterparts on Friday on safe-haven appeal amid concerns about global economic growth due to a surge in coronavirus cases and fresh lockdown restrictions in some countries in Europe.

Traders were also betting on the Federal Reserve tightening its monetary policy sometime in the foreseeable future.

Comments by New York Fed President John Willims, Fed Governor Christopher Waller and Fed Vice Chair Richard Clarida about monetary tightening have triggered speculation that the central bank will likely tighten its policy soon.

Williams said that the the economy is experiencing a broader based increase in inflation and jump in inflation expectations, adding that officials are not willing to allow long-run inflation expectations to move up significantly higher.

The economy is "roaring" back, with huge gains in employment and a sharp drop in unemployment after the pandemic. Although the rise in short-run and long-run inflation expectations are positive factors, the central bank would not tolerate long-run inflation expectations to accelerate significantly higher, he added.

Waller said the U.S. central bank should speed up the pace of tapering its bond purchases to give more leeway to raise interest rates from their near-zero level sooner than it currently expects if high inflation and the strength of job gains persists.

At a separate event, Fed Vice Chair Richard Clarida said it "may very well be appropriate" to discuss speeding up the Fed's asset purchase wind-down during its upcoming meeting in mid-December.

The dollar index climbed to 96.24, just 0.02 points shy of a 16-month high it touched a couple of days ago. It pared some gains subequently and is at 96.04, up 0.50 points or 0.52% from the previous close.

Against the Euro, the dollar is trading at 1.1289, gaining 0.75% from 1.1374.

The Pound Sterling has weakened to $1.3447 from $1.3498.

The dollar is trading at 114.00 yen, losing ground from 114.26.

Against the Aussie, the dollar is at 0.7234, firming from 0.7277.

The dollar is firm against Swiss franc, fetching CHF 0.0285 a unit, compared to CHF 0.9257 Thursday evening.

The dollar is stronger against the Loonie at C$ 1.1647, gaining from C$ 1.2603, with falling crude oil prices weighing on the Canadian currency.

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