By Geoffrey Smith 

-- The dollar was flat in early trading in Europe on Friday, on course to end the week lower after encouraging signs from the pandemic revived global risk appetite, supporting higher yielders. 

By 3:30 AM ET (0830 GMT) the dollar index, which tracks the greenback against a basket of half a dozen advanced economy countries, was effectively unchanged at 96.06. Moves in all the major currencies were also minor. The euro was up less than 0.1% at $1.1347 and the pound was up a similar amount at $1.3412.

However, the dollar has lost between 1% and 1.5% this week against sterling and the Canadian, Australianand New Zealand dollars, and nearly 1% against the euro, as scientific data has dribbled out suggesting that the latest wave of the pandemic will be less economically damaging than previous ones. The only notable gains it has made have been against other haven currencies, such as the Japanese yen and the Swiss franc. 

Data released on Thursday that showed sustained inflationary pressure in the U.S. weren't enough to upset the broader optimism as a growing body of evidence suggested that the Omicron variant of Covid-19 is less likely than all previous dominant strains to lead to serious illness. The more evidence goes in that direction, the less likely disruptions to economic life will become. 

Trading has now all but stopped ahead of the Christmas holiday period, but markets remain at least formally open.

As has been the case all week, the sharpest moves are in the Turkish lira, whose rally in response to President Recep Tayyip Erdogan's attempts to stop dollar hoarding now appears to be running out of steam. From a high of over 18 lira last week, the dollar fell as low as 10.1565 on Thursday before starting to gain ground again. By 3:30 AM ET, it traded at 11.6279, up 3.6% on the day.

The Russian ruble was testing its highest level in over a month after news suggesting that talks with the U.S. to de-escalate the situation on the Ukrainian border may take place in the near future. President Vladimir Putin slightly dialed down the tension at his annual press conference on Thursday, declining to repeat a threat of military action that he had made in a speech earlier in the week.

The South African rand also strengthened after fresh data showing that the first country to identify the Omicron variant of Covid-19 may soon put its latest infection wave behind it. The 7-day average for new infections is already down by around a quarter from its peak last week.