USD still favourite safe haven investment

The dollar headed for a weekly advance against the euro and British pound on speculation a U.S. package to end the recession will fall short, spurring demand for the relative safety of the greenback and U.S. Treasuries.

The yen was set for its first weekly gain versus the dollar in three weeks on speculation Japanese investors will repatriate earnings from U.S. government bond payments. The U.S. currency may rise for a fourth day versus the euro before a report that economists say will show the 16-nation region shrank the most in 13 years, prompting traders to add to bets for more European Central Bank interest-rate cuts next month.

Risk-aversion will not fade unless we know more concrete details of the U.S. plans. This will keep interest in safe havens alive.

The dollar traded at $1.2880 per euro. The yen traded at 117.01 versus the euro. The U.S. currency traded at 90.83 yen.