Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar on Back Foot as Omicron Optimism Grows

ForexDec 09, 2021 09:18
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Peter Nurse - The dollar edged higher Thursday, but remained on the back foot as risk appetite remained strong on positive news surrounding the likely economic damage caused by the Omicron Covid variant.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.2% to 96.037, some way below the year’s high of approaching 97 seen at the end of November.

USD/JPY fell 0.1% to 113.53, EUR/USD slipped 0.2% to 1.1324, just below a one-week high, and the risk-sensitive AUD/USD gained 0.1% to 0.7176, just off its weekly high.

GBP/USD dropped 0.1% to 1.3203, after falling to a 2021 low on Wednesday after U.K. Prime Minister Boris Johnson imposed tougher Covid-19 restrictions in England, ordering people to work from home and wear masks in public places. Social gatherings will still be allowed, however. It has been politically impossible to restrict them due to public outrtage over a party held last Christmas by staff at 10 Downing Street in defiance of the government's own social distancing rules 

Despite this news out of England, risk-friendly currencies have seen demand this week following indications that the worst fears associated with the new Covid variant may not be realised.

Pfizer (NYSE:PFE) said on Wednesday that three doses of its Covid-19 vaccine, developed with BioNTech, neutralised the new Omicron variant in a laboratory test, indicating that booster shots could be key to protection against infection.

"We have highly effective vaccines that have proved effective against all the variants so far, in terms of severe disease and hospitalisation, and there's no reason to expect that it wouldn't be so" for Omicron, Mike Ryan, the World Health Organisation's emergencies director said Wednesday.

With the uncertainty surrounding the Omicron variant beginning to dissipate, attention is turning back to central banks and how they tackle the conflict between confronting high inflation and ensuring growth continues.

The Federal Reserve is still widely expected to announce it will accelerate tapering of its bond-buying program at its meeting next week, but last week’s nonfarm payrolls release disappointed.

Traders will likely keep a watchful eye on the release of the latest weekly U.S. jobless claims data, at 8:30 AM ET (1330 GMT), the most up-to-date gauge of the strength of the country’s labor market.

Elsewhere, USD/CAD rose 0.1% to 1.2659 after the Bank of Canada held its key overnight interest rate at 0.25% on Wednesday, as expected, and maintained its guidance that a first hike could come as soon as April 2022.

USD/PLN rose 0.1% to 4.0680 after Poland’s central bank raised its key interest rate by 50 basis points to 1.75%, as it battles the fastest inflation in two decades.     

USD/CNY was largely unchanged at 6.3435 after the People’s Bank of China tried to rein in its buoyant currency, setting its reference rate for the yuan at a weaker-than-expected level against the dollar.

USD/HUF rose 0.1% to 322.22 ahead of Thursday’s meeting of Hungary’s central bank, which is expected to deliver its fifth interest rate hike in a month in an attempt to combat inflation running at the fastest pace in 14 years.

Dollar on Back Foot as Omicron Optimism Grows

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
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.
Continue with Google
Sign up with Email