Latest News

Dollar Stable as Traders Digest Omicron News; Rand, Aussie Dollar Hit

Forex5 hours ago (Dec 02, 2021 08:20)

© Reuters

By Peter Nurse

Investing.com – The dollar traded largely unchanged Thursday, with the safe haven Japanese yen more in demand as worries over the omicron Covid variant mounted, weighing on the South African rand and the Australian dollar. 

At 2:50 AM ET (0750 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged marginally higher to 96.090, consolidating in the middle of its range over the past two weeks.

EUR/USD fell marginally to 1.1315, GBP/USD climbed 0.2% to 1.3299, and USD/JPY rose 0.4% to 113.23, a recovery of sorts from Tuesday’s low of 112.53, a level not seen since Oct. 11.

Additionally, the risk-sensitive AUD/USD rose 0.1% to 0.7110, not far from Tuesday’s low of 0.7063, its weakest since early November of last year, while USD/ZAR fell 0.3% to 15.9760, after a more than 1% surge overnight.

“G7 FX volatility is at its highs for the year and it is not hard to see why,” said analysts at ING, in a note. “Over the last week news of the omicron variant has inserted a new and, as yet, unsized risk premium into global asset markets.”

Adding to the concerns was the news late Wednesday that the U.S. recorded its first case of the omicron variant, while the number of new cases reported in South Africa, where omicron was first discovered, doubled from Tuesday to Wednesday with the new variant becoming the dominant strain, accounting for nearly three-quarters of cases.

Much remains unknown about the new variant, which has spread to at least two dozen countries in around three weeks, but the World Health Organization said Wednesday that it expects to have more information on its transmissibility within days. However, Australia’s Chief Medical Officer Paul Kelly was quoted as saying there was no evidence to suggest it was more dangerous than the Delta variant. Elsewhere, GlaxoSmithKline (NYSE:GSK) said its antiviral treatment Sotrovimab, which has already been approved in the U.K., appears 79% effective against Omicron.

The dollar should still receive some support after Federal Reserve Chair Jerome Powell reiterated during the second day of his testimony to Congress on Wednesday that the central bank is set to consider at its December meeting a faster tapering of its bond-buying program, which could lead to earlier interest rates hikes. Cleveland Fed President Loretta Mester indicated in an interview on Wednesday that she expects two 25 basis point hikes next year.

The main U.S. economic data release scheduled for Thursday will be the weekly initial jobless claims, another indication of the health of the U.S. labor market. This follows ADP private payrolls rising 534,000 in November, less than in October but more than expected, and ahead of the much anticipated government jobs report on Friday. 

Elsewhere, USD/TRY rose 1.5% to 13.4581, with the lira trading near record lows, after President Recep Tayyip Erdogan abruptly replaced his finance minister, Lutfi Elvan, suggesting rifts within the administration over the policy of aggressive interest-rate cuts despite raging inflation.

Dollar Stable as Traders Digest Omicron News; Rand, Aussie Dollar Hit

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

You may also like

Leave a reply

Your email address will not be published.

More in Latest News