Dollar falls out of favor as Omicron exits volatile forex market
The NSE 1.30 dollar fell again in early Asia on Wednesday, entering a third straight session under pressure, with investors favoring riskier currencies and assets. The New Zealand dollar edged up 0.8% on Tuesday, its best day since October, recovering almost a year from last trading at $0.6757 and the pound gaining 0.46% in best day of the month, trading at $1.3267.
With the dollar also up 0.44% on the safe-haven yen, Tuesday’s currency moves are in line with oil gains and a 1.6% gain in MSCI’s gauge of stocks globally world. The result is the dollar index, which measures the currency against its major currencies, last at 96,441 from 96,994 last week when it tested a 16-month high. Market participants struggled to point to clear reasons for the ‘at risk’ mood, saying that markets were struggling to gauge the consequences of the Omicron variant of COVID19, which led to a sharp spike irregular movements during the season. Stocks sold heavily on Monday and the dollar index gained 0.7% on Friday.
While the weeks on either side of Christmas are generally low volatility for currencies and other asset classes, ING analysts said: “This year, a number of seasonal trends will be in focus mixed with the Omicron variant threatened new restrictions and the market remained trading all week Important decisions of the central bank. ”
Last week, Britain became the first G7 economy to raise interest rates since the start of the pandemic, with the US Federal Reserve also signaling a plan to tighten the effects in 2022, but The European Central Bank slowed down its stimulus measures only slightly. Omicron infections are on the rise in Europe, the US and Asia, forcing countries around the world to consider new travel restrictions and reset quarantine periods for incoming travelers.
But a Bloomberg report that the US Food and Drug Administration will approve COVID19 drugs from Pfizer Inc and Merck as early as Wednesday may have helped the mood. The euro was last at $1.1289 on Wednesday, slightly higher, which would be its third consecutive rally.
In emerging market currencies, traders are bracing for another volatile day for the Turkish lira, which closed 6% higher on Tuesday, after falling 8.6 % and increased by 18.5%. Bitcoin has generally been flat, just below $49,000 after a 4% gain on Tuesday. Ether, the world’s second largest crypt currency, is also up this week and is just above $4,000.