The impact of Omicron's COVID variant which is indicated to be harmless still supports risk appetite and weakens the US Dollar. JPMorgan also projects a recovery in 2022.
The US dollar fell in the trading session on Wednesday (08/December) this evening, still against the backdrop of easing concerns over the impact of the Omicron variant of COVID on the economy. The stronger risk appetite has weakened investors' interest in the safe haven function of the US Dollar. At press time, the US Dollar Index was down 0.31% to 95.9.
"Concerns about Omicron seem to be fading a bit. In particular, after the increase in data - although unconfirmed - indicating that this new variant infection appears to be more benign than previously feared," said Michael Brown, analyst at Caxton.
The first case of Omicron infection found in South Africa was reported not to cause serious symptoms. Preliminary evidence presented by US infectious disease specialist Anthony Fauci indicates that this variant of COVID is indeed more contagious, but not dangerous.
The report succeeded in generating market optimism. High risk profile assets are being hunted by investors, including commodity currencies. The Australian Dollar is also the best performing commodity currency against the US Dollar. Tonight, AUD/USD is still up 0.65% to 0.7164, extending a three-day rally.
The positive US economic data released tonight did not provide significant assistance to the dollar. In fact, the JOLTS employment report rose from 10,602K to 11,033K in October.
JPMorgan Optimistic of Economic Recovery in 2022
Market optimism seems to be getting bigger for 2022. As one of the world's largest banks, JPMorgan predicts that 2022 will be the year the pandemic ends and the full global economic recovery begins. JPMorgan's outlook report for next year says that new vaccines and therapeutic measures will result in a strong recovery cycle, a return to global mobility, and massive consumer demand.
"Our view is that 2022 will be a year of a full global recovery, the end of the pandemic era, and a return to normal economic and market conditions as before the COVID-19 infection," said Marko Kolanovic, JPMorgan's Chief Global Market Strategist.
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