The dollar falls as investors favor riskier currencies and asset classes

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The US dollar fell on Wednesday morning as investors favored riskier currencies and asset classes. This is the third consecutive session where the greenback is under pressure.

The New Zealand dollar rose 0.8% on Tuesday, recovering from a nearly one-year low until the last trade at $ 0.6757, and the British pound gained 0.46% – its best day in a month – last trade at $ 1.3267.

The US dollar also gained 0.44% against the safe haven yen. Tuesday’s currency moves were in line with progress in oil and a 1.6% gain in the gauge of MSCI stocks across the globe.

The result was that the dollar index, which measures the currency against its major peers, was last at 96.441 from 96.994 last week when it tested a 16-month high.

Market participants struggled to indicate a clear reason for the mood “at risk”, saying markets were struggling to assess the consequences of the Omicron variant of COVID-19, resulting in unusual volatility.

Stocks sold strongly on Monday and the dollar index gained 0.7% on Friday.

While the weeks on either side of Christmas are generally low volatility for currencies and other asset classes, ING analysts said: “This year some seasonal trends will be mixed with the Omicron variant threatening to force further restrictions. and the markets are still dealing with a week full of key central bank decisions. “

Britain last week became the first G7 economy to raise interest rates since the start of the pandemic, with the U.S. Federal Reserve also signaling plans to tighten its effects in 2022, but the European Central Bank no slowed down stimulus measures only slightly.

Omicron infections are on the rise in Europe, the United States and Asia, forcing countries around the world to consider new travel restrictions and reimpose quarantine periods for inbound visitors.

But a Bloomberg report that the U.S. Food and Drug Administration is set to approve COVID-19 treatment pills from Pfizer Inc and Merck as early as Wednesday may have helped the mood.

The euro was last at $ 1.1289 as of Wednesday slightly higher, which would be its third consecutive session of gains.

In emerging market currencies, traders were bracing for another day of volatility for the Turkish lira, which closed 6% higher on Tuesday, after falling 8.6% and rising 18.5%.

Bitcoin was broadly flat just below $ 49,000 after gaining 4% on Tuesday. Ether, the world’s second largest cryptocurrency, also gained this week and was just over $ 4,000.

-With contributions from the agency

First publication: STI


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