* The dollar and other traditional havens lag behind while stocks hit record highs
* Canadian dollar gains in overnight commodity currencies
* Graph: World exchange rates tmsnrt.rs/2RBWI5E
TOKYO, Jan. 21 (Reuters) – The dollar fell against major pairs on Thursday as optimism that the US government’s huge stimulus package would increase growth undermined demand for safe haven currencies.
Risky commodity currencies were supported as Asian stocks followed US stocks on the rise to new records after Joe Biden, who outlined plans for a $ 1.9 trillion pandemic relief package, was sworn in as president.
“The feeling of risk is very positive now and we expect it to continue this year, with the expectation of a very strong recovery,” said Shinichiro Kadota, senior foreign exchange strategist at Barclays Capital in Tokyo.
The Canadian dollar and Norwegian krone are expected to outperform, while European currencies lag behind, he said.
The dollar is also expected to strengthen this year against the euro, as the United States recovers faster than most other countries, he added.
The US currency fell 0.2% to C $ 1.2611 in Asia, falling 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 8,456 Norwegian krone, also a third day of falls.
The Australian dollar rose 0.4% to 77.74 cents, adding to a 0.7% increase in the previous session. Australia boasted another solid increase in employment in December, data released on Thursday showed.
Biden was sworn in as the 46th president of the United States on Wednesday, promising to end the “uncivil war” in a deeply divided country, recovering from a shaky economy and a coronavirus pandemic that killed more than 400,000 Americans.
North of the border, the Bank of Canada said on Wednesday that the arrival of a COVID-19 vaccine and increased external demand are brightening economic prospects in the medium term, opting to keep its basic interest rate at 0.25% . Money markets had been looking at the prospect of a so-called micro-rate cut of less than 25 basis points.
The dollar lost 0.2% to 103.59 yen on Thursday, another safe haven currency, after falling to a two-week low of 103.33.
The Bank of Japan kept monetary policy unchanged on Thursday, while revising its economic forecast for the next fiscal year.
The euro gained 0.2%, reversing a similar drop in the previous session, to $ 1.2135.
The European Central Bank also decides the policy on Thursday, with no expected changes.
European countries are struggling to contain the new coronavirus amid fears that a new variant could lead to stricter blockades and more economic problems.
The dollar index fell 0.2% to 90.268, dropping for the third day since it hit the 90.956-month high of almost a month on Monday.
The dollar started the year on firmer bases, supported by an increase in US Treasury yields in response to Biden’s massive stimulus plan.
But many analysts expect a return to the dollar’s bearish trend, which led it to lose nearly 7% in 2020 amid expectations that US monetary policy would remain ultra-fragile and hopes for a post-pandemic global recovery.
“The weakness of the USD vs EM and commodity FX has yet to run against the backdrop of the vaccine and the US stimulus has led to global reflection, but the USD vs EUR outlook is not so clear in the short term,” wrote strategists of the Westpac in research note.
“A reassessment of the US outlook in the wake of Biden’s $ 1.9 trillion fiscal spending plan against a still weak eurozone scenario could keep the USD steady against the euro.
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Kevin Buckland reporting; Simon Cameron-Moore edition