The US dollar fell against its peers on Friday to a 1-week low while deepening losses for the fourth straight day, to head for the first weekly loss in 2021 due to weak demand and hopes about a huge US stimulus package by the new US President Joe Biden, ahead of the release of key US data.

The dollar index fell 0.1% to its 1-week low of 90.05 points, after opening at 90.15 and hit a high of 90.17.

The greenback lost 0.4% yesterday, in the third straight daily loss due to improved appetite in high risk currencies.

The dollar index lost around 0.75% so far this week, to head for its first weekly loss in 2021and during the last three weeks.

Demand for the US dollar slowed down due to high market sentiment and improved appetite in high risk currencies thanks to hopes about a huge stimulus package by the new US President Joe Biden's administration.

Joe Biden's inauguration ceremony took place on Wednesday at the Capitol building in Washington, and he was sworn in as the 46th US president.

Biden called on Americans to unite and stressed that he will always work for democracy in his country. Biden is also expected to inject a $1.9 trillion Covid relief bill.

At 14:45 GMT, the US manufacturing PMI is expected down to 56.6 from 57.1, while services PMI is expected down to 53.3 from 54.8.

European stocks fell on Friday, and pulled back from an 11-month high on profit-taking, and the market's risk-off sentiment due to concerns over the rising Covid-19 infections in Europe, and China's new lockdown measures.

The Stoxx Europe 600 index fell more than 0.9% as of 11:15 GMT, after it closed higher by 0.4% yesterday, and hit the highest level since February 2020 at 413.98 points.

The travel and leisure sector saw the largest losses in Europe, with a drop of more than 2%, based on the renewed concerns about the pandemic.

Europe's composite PMI (for manufacturing and service activities) fell to 47.5 points in January from 49.1 points in December.

The Chinese authorities imposed new lockdown restrictions in the country, aimed at preventing the spread of the virus, after 103 new cases of were reported on Friday and 144 cases on Thursday.

S&P 500 futures fell 0.75%, after the index closed flat yesterday at Wall Street at its record high of 3,861.45 points.

Back to Europe, the Euro Stoxx 50 index fell 1.1%, France's CAC 40 fell 1.25%, the UK's FTSE 100 fell 0.9%, and Germany's DAX dropped 0.9%.

Oil prices dropped 1.5% on Friday, on track for the second daily loss out of 3 days, weighed down by demand concerns in China after the Chinese authorities imposed new lockdown restrictions due to rising coronavirus infections, in addition to a build in the US crude inventories, according to the American Petroleum Institute's preliminary data. 

US crude fell 1.6% to $52.23 a barrel, after opening at $53.09, and hit a high of $53.13, and Brent crude fell 1.3% to $55.26 a barrel, after opening at $56.00, and hit a high of $56.20.

US crude yesterday rose 0.1% yesterday, and Brent crude futures rose 0.6%, as most dollar-denominated commodity prices rose.

The Chinese authorities imposed new lockdown restrictions in the country, aimed at preventing the spread of the second Covid-19 wave, especially after a spike of infections in many provinces.

Shanghai has reported the first coronavirus cases in more than 2 months, and the Chinese government urged citizens not to travel during the Lunar New Year holiday.

The American Petroleum Institute reported Wednesday that crude inventories rose 2.6 million barrels during the week ending January 15, missing forecasts of a drop by 1.2 million barrels.

While the US Energy Information Administration's official data will be released later today, amid forecasts for inventories to fall by 1.2 million barrels.

USD/JPY tilted higher in Asian trade off January 7 lows while on track for the second weekly loss in a row, following a batch of data from Japan.

As of 06:56 GMT, USD/JPY rose 0.08% to 103.59, with an intraday high at 103.61, and the lowest at 103.49.

Japan's consumer prices fell 1.2%, compared to a 0.9% drop in November.

Core prices, excluding food and energy, fell 0.4%, compared to a 0.3% decline in November, as the manufacturing PMI fell to 49.7 from 50.0.

From the US, manufacturing PMI is expected down to 56.6 from 57.1, while services PMI is expected down to 53.3 from 54.8.

US existing home sales are expected down 2% to 6.55 million units, compared to a 2.5% drop in November to 6.69 million.