By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — The dollar edged down against major counterparts in Asian trading on Friday, although strategists see gains for the U.S. currency further out.
The dollar index (DXY 79.69, -0.50, -0.62%) , which measures the U.S. unit’s performance against a basket of six other currencies, traded at 79.78 in Asia, down from 80.167 in late North American trading Thursday.
Still, the index is trading well off lows hit in early November.
“Fiscal policy and stronger economic momentum have been the U.S. dollar drivers over the last 6 weeks,” said strategists at the Royal Bank of Scotland.
They now believe real U.S,. gross domestic product growth could reach 4% during the current quarter.
“The U.S. dollar has responded to rising U.S. rates, and we expect stronger U.S. momentum and higher rates to support a more rapid U.S. dollar gain during the first half of 2011,” they said.
BNP Paribas currency strategists said, “as well as being supported by changing liquidity dynamics, we expect the U.S. dollar to be increasingly supported by signs of the U.S. recovery gaining momentum over the coming year.”
“The best way to position for further positive surprises coming from the US economy is via long U.S. dollar/Japanese yen strategies in our view,” they added.
The greenback (USDYEN 83.9100, -0.1000, -0.1190%) bought ¥83.85 yen on Friday, down from ¥84.17 late Thursday. See real-time currencies quotes and tools.
Meanwhile, the euro (EURUSD 1.3321, +0.0085, +0.6422%) rose to $1.3290 in Asian trading, from $1.3217 in late North American action, after European leaders agreed on Thursday to work toward a permanent fund to bail out member states.
The European Council is expected to adopt the general framework for the bailout mechanism later in the day, with the details regarding its functioning set to be worked out in 2011, according to the press release.
