* Dollar index up 0.2% as Biden offers $ 1.9 trillion incentive
* COVID-19 infections are on the rise in China
* Graphic: Global FX levels tmsnrt.rs/2RBWI5E (Update prices, add reporting, add dollar details)
LONDON, Jan 15 (Reuters) – Currency markets turned on Friday, with the dollar on track for its biggest weekly gain since November 2020 and analysts predict further short-term strength as rising coronavirus infections limit risk appetite.
The dollar index rebound started from a three-year low last week. It picked up how European markets opened on Friday, after an overnight slump after U.S. Federal Reserve Chairman Jerome Powell said “this is not the time” to talk about changing the purchase of the UK’s assets. Fed.
President Biden unveiled his $ 1.9 trillion stimulus package proposal on Thursday, but analysts said market influence was limited by uncertainty about how easily Democrats will be able to implement the proposals. get them through the Senate.
“The reality is that while Democrats have now gained more power after winning last week ‘s escape elections in Georgia, that power still has its limits,” Derek Halpenny wrote. MUFG money strategist in a note to the client.
“While short-term, the U.S. dollar could expand further, the background of the dollar’s big picture remains negative,” he said.
At 1141 GMT, the dollar index was at 90.407 against a basket of currencies, up 0.2% on the day. It was set for a weekly gain of around 0.4%, making it the strongest week since November.
Against a stronger dollar, the euro was down 0.2% at $ 1.21325.
Rising coronavirus infections were also reducing risk appetite, as daily issues in China are peaking in more than 10 months.
France will tighten its COVID-19 border controls and extend its curfew by two hours, while German Chancellor Angela Merkel said she wanted “very swift action” to combat the spread of virus variants after Germany had the highest number of deaths.
“New issues are emerging around the world that have impacted short-term economic recovery,” said Simon Harvey, senior FX analyst at Monex Europe.
“It simply came to our notice then. Case numbers are rising, but nationwide restrictions may not be introduced, ”he said, adding that he intended to support the dollar while other major economies took control. tighter locking measures.
The outgoing Trump administration lifted tensions with China, imposed sanctions on Chinese officials and companies, including an investment ban on nine more companies – moves China said it is pushing the face.
The Australian dollar – seen as a beer substitute for risk – was down about 0.6% at 0.7736 against the US dollar at 1147 GMT. The New Zealand dollar was also down about 0.6% on the day.
The dollar rose about 0.2% against China’s offshore yuan, with the pair changing hands at 6.476 at 1148 GMT.
Reporting by Elizabeth Howcroft, edited by Larry King and Barbara Lewis