The US dollar strengthened against other safe-haven currencies due to easing market concerns about the threat of the Omicron variant of the COVID-19 virus.
The US dollar index (DXY) tends to be sideways around the 96.20s in today's trading (7/December). However, the greenback strengthened against other safe-haven currencies due to easing market concerns about the threat of the Omicron variant of the COVID-19 variant.
Initial observation reports from South Africa revealed that patients infected with Omicron had milder symptoms than previous waves of COVID-19, particularly the Delta variant. Anthony Fauci, the White House's Chief Health Adviser, also said Omicron didn't appear to be too bad.
The news restored market confidence in expectations of a global economic recovery. High risk currencies are in demand, while safe havens are being sidelined again.
The USD/JPY currency pair closed yesterday's trade with gains of around 0.6 percent, then continued to climb around 0.2 percent to the 113.70s in Asian trading today. The Swiss franc experienced even sharper volatility.
USD/CHF skyrocketed more than 100 pips yesterday, making it the most recent spike in three months. The position is down about 0.2 percent today, but likely just because the previous gains were too much.
"While there remains a lot of uncertainty regarding the health and economic impact of Omicron, investors have welcomed news from South Africa that the exponential increase in Omicron infections has not been accompanied by a major surge in hospitalizations," said Rodrigo Catril, strategist at National Australia Bank.
Meanwhile, more and more market attention is turning to topics surrounding central bank policy. The US dollar continues to be supported by the Fed 's hawkish expectations . AUD/USD also continued its rebound towards 0.7100 armed with the optimism of the Australian central bank.
The forex calendar features a fairly tight schedule for major central bank announcements. Canada's central bank (BoC) will be playing on Wednesday. While the Fed, BoE, ECB, and BoJ will present their announcements one after another throughout next week.
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