By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia. However, the greenback is set for its best weekly gain in about a month as ongoing investor worries about a quicker-than-expected U.S. interest rate hike and by rising COVID-19 infections capped losses.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.06% to 92.575 by 11:45 PM ET (3:46 AM GMT).

The USD/JPY pair inched up 0.09% to 109.95. The Bank of Japan (BOJ) concluded a two-day meeting earlier in the day, where it left its yield curve control (YCC) target unchanged at -0.1% for short-term interest rates and 0% for 10-year bond yields. BOJ also cut the current fiscal year’s growth forecast while maintaining that the economy was headed for a moderate recovery.

The AUD/USD pair edged up 0.15% to 0.7438, but with the lockdown in Australia’s biggest cities of Melbourne and Sydney weighing on the Australian dollar.

Across the Tasman Sea, the NZD/USD pair gained 0.57% to 0.7020.

The USD/CNY pair edged up 0.13% to 6.4655 and the GBP/USD pair inched up 0.07% to 13838, with the U.K. set to lift most of its remaining COVID-19 on Jul. 19.

New Zealand’s consumer price index (CPI) for the second quarter was higher than expected, growing 3.3% year-on-year and 1.3% quarter-on-quarter, a decade high. The New Zealand dollar was among the biggest mover amongst majors in the morning trade after the data’s release.

Investors are now pricing an 86% chance that the Reserve Bank of New Zealand will hike interest rates in August, earlier than expected, becoming the first developed-market central bank to exit from emergency policy settings should it do so.

However, a firm greenback meant that the New Zealand dollar remained within recent ranges.

"Clearly the U.S. dollar has got some power behind it, and I think that's holding back all the majors… there's an interest rate side to it, and sometimes it's a safe-haven bid… we do feel that the dollar's going to be quite strong over the next few months," Westpac strategist Imre Speizer told Reuters.

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With Speizer adding that recent U.S. data fed into higher yields and rate-increase expectations, investors now await data on June core retail sales as well as the Michigan consumer sentiment and expectations indexes, due later in the day.

U.S. Treasuries recorded a third consecutive week of gains, with worries over surging COVID-19 outbreaks involving the Delta variant and bets on inflation being transitory pulling long-end yields lower.

The Thai baht, one of the currencies most battered by the recent COVID-19 outbreaks, was set for a fifth consecutive weekly loss as the country posted a record number of daily cases.

Meanwhile, cryptocurrencies fell towards the bottom of recent ranges, with bitcoin at $31,660 and ether at $1,910.

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