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  • Writer's pictureanalysiswatch

Title: Dollar on Back Foot as Omicron Optimism Grows

Dec 09, 2021 02:59AM ET

By: AnalysisWatch

The dollar edged higher on Thursday but remained on the retreat as risk appetite remained high on positive news about the likely economic damage from the Omicron COVID variant.

The dollar index, which measures the value of the US currency against a basket of six other currencies, was up 0.2 percent at 96.037 at 2:55 a.m. ET, well below the yearly high of nearly 97 reached in late November.

The risky AUD/USD rose 0.1% to 0.7176, just missing its high for the week.

GBP/USD fell 0.1% to 1.3203 after hitting a 2021 low on Wednesday following British Prime Minister Boris Johnson's imposition of tighter COVID-19 restrictions in England, ordering people to work from home and wear masks in public.Social gatherings, however, are still allowed. Due to public outrage over a party held by staff at 10 Downing Street last Christmas, in defiance of the government's own social distancing rules, it was politically impossible to restrict them.

Despite this news from the UK, risk-friendly currencies saw demand this week after indications that the worst fears surrounding the new COVID variant may not materialise.

Pfizer said on Wednesday that three doses of its COVID-19 vaccine, developed jointly with BioNTech, neutralised the new Omicron variant in a laboratory test, suggesting that booster shots could be the key to protecting against infection.

As uncertainty about the Omicron variant gradually fades, attention is once again turning to central banks and how they manage the conflict between fighting high inflation and ensuring sustained growth.

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