* Greenback and other traditional ports lag as stocks hit records
* Canadian dollar rose overnight in commodity currencies
* Image: Global FX rates tmsnrt.rs/2RBWI5E
TOKYO, Jan. 21 (Reuters) – The dollar fell against major competitors on Thursday as optimism that the new US administration’s massive stimulus package will bolster growth will undermine demand for safe-haven currencies.
Riskier commodity currencies were buoyed as Asian stocks followed US stocks and hit new records after Joe Biden, who has planned a $ 1.9 trillion pandemic relief package, was sworn in as president.
“Risk sentiment is quite positive at the moment and we expect it to remain so this year, with growth expected to recover quite strongly,” said Shinichiro Kadota, senior currency strategist at Barclays Capital in Tokyo.
The Canadian dollar and Norwegian krone are likely to outperform, while European currencies lag behind, he said.
The greenback should also strengthen against the euro this year as the United States is recovering faster than most other countries, he added.
The US currency fell 0.2% to C $ 1.2611 in Asia and fell for the third day. It hit a three-year low at C $ 1.2607 overnight after the Bank of Canada chose not to cut interest rates.
The dollar fell 0.4% to NOK 8.456, also a third day of decline.
The Australian dollar rose 0.4% to 77.74 cents, contributing to a rally of 0.7% in the previous session. Australia saw another solid rise in employment in December, data released Thursday showed.
Biden was sworn in as the 46th President of the United States on Wednesday, pledging to end the ‘uncivilized war’ in a deeply divided country reeling from a battered economy and a raging coronavirus pandemic affecting more than 400,000 Americans killed.
North of the border, the Bank of Canada said on Wednesday that the arrival of a COVID-19 vaccine and stronger foreign demand improve the medium-term economic outlook, choosing to keep its key overnight rate at 0.25%. The money markets looked at the prospect of a so-called micro rate cut of less than 25 basis points.
The dollar lost 0.2% at 103.59 yen, another safe haven currency, on Thursday after falling to a two-week low of 103.33.
The Bank of Japan kept monetary policy unchanged on Thursday as it revised its economic forecasts for the next fiscal year.
The euro gained 0.2%, reversing a similar decline from the previous session, and traded at $ 1.2135.
The European Central Bank will also decide on policy on Thursday, without any change expected.
European countries are struggling to contain the new coronavirus because they fear that a new variant could lead to more severe lockdowns and more economic pain.
The dollar index fell 0.2% to 90,268, falling for the third day since hitting a month high at 90,956 on Monday.
The greenback started the year brighter, supported by a hike in US Treasury yields in response to Biden’s plan for massive stimulus measures.
But many analysts expect a return to the dollar’s downtrend, which saw it drop nearly 7% in 2020 amid expectations that US monetary policy would remain ultra-loose and hopes for a global recovery after a pandemic.
“USD weakness versus emerging markets and commodity FX should continue to turn against vaccine- and US stimulus-led global reflation, but the USD outlook versus the EUR is not that clear in the near term,” Westpac strategists wrote in a research note.
“A reassessment of the outlook for the US in the wake of Biden’s $ 1.9 billion fiscal plan versus a still-weak Eurozone picture could keep the USD stable against the EUR.”
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Reporting by Kevin Buckland; Editing by Simon Cameron-Moore