The US dollar is depressed at a one-week low in a sideways range. Despite the increase in the Omicron case, analysts' optimism strengthened US stocks.
The US dollar held at low levels, hampered by strengthening equity markets in the middle of the Christmas holiday. The development of the Omicron virus variant is the main concern of the night market. Low trading volume makes the issue more sensitive. In the trading session Monday (27/December) evening, the US Dollar Index traded in a consolidative range at 96.07.
The increase in infections of the Omicron variant of the Corona virus has reportedly disrupted public holiday activities in a number of countries. In the US, at least 1,300 commercial flights have had to be canceled due to a shortage of cabin crew who must undergo quarantine. US cruise ships have also canceled a number of docking schedules due to the rise in COVID-19 positive cases. Dr Anthony Fauci, the head of the US Department of Health, warned that Omicron infections were expected to increase in areas where many people had not been vaccinated.
Not only the US, China and France are also struggling to face the increase in COVID-19 cases. China reported the highest increase in cases in Xian in 21 months, while France had to re-implement restrictions due to the rising number of Corona infections.
Analysts Still Optimistic, Interest in Risk Turn Equity
However, experts still have an optimistic view. Apart from the milder Omicron symptoms, tapering and signals of a Fed rate hike are not expected to have much impact on the economy next year. That's what boosted the equity market gains tonight.
"Given neither the tapering nor the Omicron variant will have too big an impact on the global economy, the money will flow into equities," said Steven Leung, analyst at UOB Hong Kong.
In line with Leung, Securequity analyst, Jawaid Afsar, also gave a positive prediction. "Towards 2022, we are still facing COVID uncertainty. However, the good news is, according to WHO, the end of the pandemic will occur at the end of next year," Afsar said.
Afsar added that the market was filled with more varied issues; starting from inflationary pressures, monetary tightening, and geopolitical risks. The US dollar is also predicted to strengthen, especially against the euro, due to the policy divergence between the Fed and the ECB.
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