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Title: Dollar in Demand Ahead of Fed Meeting; Hits One-Week High

Dec 14, 2021 02:56AM ET

By: AnalysisWatch

The dollar moved to a one-week high on Tuesday in front of the Federal Reserve meeting, where a hawkish go is normal.

Worries over the Omicron COVID variety likewise supported places of refuge to the detriment of higher-yielding monetary standards.

The dollar index, which tracks the greenback against a basket of six other currencies, was up 0.1 percent at 96.365 at 2:55 a.m. ET (0755 GMT), having risen to 96.454 for the first time since December 7.

The USD/JPY rose 0.1% to 113.63, the EUR/USD fell 0.1% to 1.1275, just above the overnight new weekly low of 1.1260, and the risky AUD/USD fell 0.1% to 0.7123.

Optimism about the Omicron variant faded on Tuesday after the first death from this version of the COVID-19 virus was reported in the UK.

In addition, researchers at Oxford University announced that two doses of current vaccines did not produce enough neutralizing antibodies against Omicron, underscoring the importance of booster shots.

Safe-haven currencies such as the US dollar gained on Tuesday, but the main focus is on the Federal Reserve, which begins its two-day monetary policy-setting meeting on Tuesday.

The Fed is widely expected to announce a faster pace of tapering of asset purchases this week, potentially starting rate hikes sooner after US consumer prices posted their biggest annual increase since 1982 on Friday.

The People's Bank of China cut the reserve requirement ratio for banks earlier this month, sparking speculation that it will also cut interest rates.

An influential Chinese think tank said on Monday that China should cut interest rates and increase infrastructure investment to ensure the economy grows by at least 5% next year.

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