The US dollar continues to enjoy support into Friday and looks set to close this week in the green over rising expectations for the Fed to shift from its dovish stance even as the rising number of COVID-19 cases around the world boost its safe haven status. At the time of writing, the US dollar index DXY is trading around 92.55.

So far this week, the DXY has strengthened by around 0.5% as markets anticipate a faster pace of economic recovery and rising inflation in the US to convince the Fed to act sooner and taper asset purchases. The recent gains in the US dollar have pressured other leading currencies, with EUR/USD down by around 0.5% for the week while AUD/USD is set to post a weekly loss of 0.9%.

However, commodity currency NZD is trading bullish early on Friday, rising back up above the key $0.70 level against the USD on the back of a sharp rise in New Zealand’s CPI. Consumer prices across the nation posted the fastest increase seen in a decade, soaring by 1.3% QoQ and by 3.3% YoY during Q2 2021.

Meanwhile, the US dollar is also strengthening as a result of a risk-off mood in global financial markets as more countries report a steady uptick in fresh coronavirus cases. The benchmark 10-year US Treasury yields have been rising for the third consecutive week over worries about the highly contagious delta variant and its economic impact, in addition to the higher inflation figures.

Later today, investors will turn their attention towards the release of retail sales and consumer confidence data from the US which could shed light on the pace of economic recovery. Economists have forecast a decline in retail sales by 0.4% MoM in June, and although in contraction, the data is better than May when they contracted by 1.3%.