* Graphic: World FX Rates https://tmsnrt.rs/2RBWI5E (updates throughout, add comment)
LONDON, January 22nd (Reuters). The dollar rose slightly on Friday after three consecutive days of losses and riskier currencies fell as dismal economic data gave global equity markets a break after another week of record highs.
The dollar had fallen against a basket of currencies for the past three sessions as market optimism about US President Joe Biden’s fiscal stimulus plans led traders to seek riskier assets and make profits in riskier currencies such as the New Zealand and Australian dollars.
That trend continued, however, on Friday as market sentiment eased, global stocks slid from record highs, and the US dollar stabilized, rising less than 0.1% at 90147 a.m. at 1206 GMT on the day.
The dollar index was still on track to hit its biggest weekly loss since mid-December.
« The dollar is generally stronger because the S&P hit a new high and then held it yesterday and Asian equity markets were all lower, » said Kit Juckes, head of FX strategy at Societe Generale.
« In the short term, it is all because of the weakness of the dollar, as capital is drawn to places that are empowered by vaccines, simple Fed policies and, indeed, low US interest rates, » he said.
But « in a week where stocks are up, risk taking and the dollar is weak, Fridays are a bit of a soufflé that gives way a little or a lot, » he added.
The Australian dollar fell after disappointing retail sales but was still poised for a weekly rise. At 1214 GMT for the day it fell 0.7% to 0.7711.
The New Zealand dollar fell 0.6% against the US dollar to 0.7178.
Gloomy economic data did little to improve sentiment as UK data showed UK retailers struggled to rebound in December.
Economic activity in the eurozone contracted significantly in January as tight lockdowns to contain the coronavirus pandemic hit the bloc’s dominant service industries hard.
Overnight data from Japan showed factory activity slowed in January and the service sector more pessimistic as immediate measures to combat a COVID-19 resurgence hurt sentiment.
« Despite the positive vaccine news that is raising sentiment from a market perspective, it is clear that there will be no similar spike in economic activity until restrictions relax, perhaps sometime in the second quarter, » said Michael Hewson, chief market analyst at CMC Markets UK said in a notice to customers.
At 1219 GMT for the day, the euro was unchanged against the dollar at $ 1.2172.
The euro gained a little on Thursday following the European Central Bank’s interest rate announcement as the bank said it may not need to use all of its envelope to buy assets.
President Christine Lagarde also said the bank is monitoring the euro exchange rate « very carefully ».
The Norwegian krone was hurt by lower commodity prices, which fell more than 1% against the euro to 10.3275.
(Reporting by Elizabeth Howcroft, Editing by Larry King, William Maclean)