Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar Rebounds; Traders Reassess Omicron Risks

ForexNov 29, 2021 16:56
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters

By Peter Nurse - The dollar traded higher Monday, boosted by higher U.S. Treasury yields as traders considered Friday’s sharp moves on the discovery of the omicron coronavirus variant as overdone.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 96.310, after dipping to a one-week low of 95.973 on Friday.

USD/JPY rose 0.1% to 113.42, after the yen, which had been the biggest beneficiary of Friday’s flight to quality, surged as much as 2% on Friday, with the pair dropping to 113.05.

EUR/USD fell 0.4% to 1.1271, while GBP/USD dropped 0.1% to 1.3329, off Friday’s 11-month low of 1.3278, while the risk-sensitive AUD/USD rose 0.3% to 0.7147, recovering after a 1% tumble on Friday that saw it dip to 0.7112 for the first time since Aug. 20.

The World Health Organization said on Sunday that it is not yet clear if the new omicron coronavirus variant is more transmissible compared to other variants or if it causes more severe disease.

Health experts from South Africa, where the new variant was first detected, have indicated that the symptoms from the omicron variant have been mild so far, although they also pointed out that their population is relatively young, and that the number of 'breakthrough' infections of vaccinated people was significant.

Vaccine makers have indicated that they will be able to reformulate their drugs in pretty short order, and this has prompted traders to unwind a lot of Friday’s sharp moves, which were all the sharper for taking place on a day when liquidity was thin due to the U.S. holiday weekend.

The benchmark 10-year yield jumped as much as 7 basis points to 1.54%, although it currently trades at 1.52%, having plunged 16 basis points on Friday - the steepest since March 2020. 

Aside from the news surrounding the omicron variant, “the general environment in FX remains quite supportive for the dollar, as the FOMC minutes and a bunch of good data kept market speculation on faster tapering and earlier tightening alive,” said analysts at ING, in a note. “On top of this, the worsening contagion situation in Europe and risk of fresh containment measures are generating further divergence in policy expectations between the ECB and Fed.”

Several officials from the European Central Bank, including President Christine Lagarde, have speaking duties on Monday, and investors will be looking for clues on the central bank’s thinking ahead of its meeting on Dec. 16. ECB board member Isabel Schnabel said the bank expects inflation to peak this month. Preliminary German inflation data for November are due in the course of the morning.

ECB officials are due to receive new forecasts that are likely to show inflation climbing at a higher rate than expected earlier, but they will also have to weigh up the dangers posed by the pandemic following the return of lockdowns to some parts of Europe, as well as the discovery of the new variant.



Dollar Rebounds; Traders Reassess Omicron Risks

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email