FOREX-Dollar Near Weekly Low As Omicron Fears Loose; read prolongs the rally

Ddollar near weeklows, euro above $ 1.13

Risk appetite boosts the Aussie and the British pound

Turkish lira extends massive rebound

Chart: Global exchange rates

Updates throughout the additions chart

LONDON, December 23 (Reuters)the dollar indexflat near a weeklong low Thursday, as fears of the Omicron COVID variant fallout abated, increasing the risk currencies such as Australian dollar and British pound.

Tthe dollar index, at 96.159 = USD, was unchanged during the day but close to its weakest since last Friday. The US dollar appreciated against the Japanese yen JPY = EBS – another safe haven currency – and was up 0.2% to 114.3, near Wednesday’s one-month high of 114.37.

Risk appetite has improved since Monday, when markets were rocked by government restrictions related to the spread of Omicron.

However, Wednesday’s data showed US consumer confidence improving more than expected in December, suggesting the economy will continue to grow in 2022 despite a resurgence in COVID-19 infections and a reduction in stimulus spending. .

A South African study during this time suggested reduced risk of hospitalization at Omicron the patients .

Australian dollar AUD = D3 rose 0.3% to $ 0.7238 after Wednesday’s 0.86% rise. The Norwegian krone strengthened to one-month highs against the dollar and euro NOK = D3, EURNOK = D3, also stimulated by soaring oil and gas prices.

The euro was stable around $ 1.1327 EUR = EBS but sterling GBP = D3 rose half a percent as inflation-adjusted gilt yields were boosted by markets pegging 100bp in UK rate hikes next year.

US real rates have stagnated since the Fed’s meeting in mid-December.

MUFG strategist Lee Hardman predicts that the correction in the US dollar will be short-lived.

“Wacky comments from Fed officials over the past week, including Fed Governor Waller and San Francisco Fed Chairman Daly, signaled that they were considering raising rates as soon as the FOMC meets. of March, “he added. said Hardman.

A turnaround could occur as early as this afternoon if the US PCE deflator hits new decades-long highs, confirming a faster Fed rate hike.

“Rampant core inflation will be the catalyst for a further significant upward adjustment in federal funds futures in favor of a stronger dollar,” ABC analysts told clients, while warning that the dollar could be further reduced if data suggests inflation is leveling off.

Elsewhere, the Turkish lira extended its surprising rebound this week, rising another one 12% at 10.6 per dollarTRY = D3>, having traded as low as 18.4 on Monday.

The big gains came after President Tayyip Erdogan said the government and the central bank would guarantee some local currency deposits against losses from currency depreciation.

Global exchange rates

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(Reporting by Tommy Wilkes and Sujata Rao; Additional reporting by Kevin Buckland in Tokyo; Editing by Andrew Heavens and Jane Merriman)

(([email protected]; + 44-20-7542-1713; Reuters messaging: [email protected]))

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