FOREX-Dollar slips as Omicron worries ease; Aussie rises

The dollar slipped against several of its major counterparts on Wednesday, as easing concerns about the economic hit from the Omicron COVID-19 variant helped support riskier currencies, with the Australian dollar on pace to notch a third straight session of gains. The dollar index, which measures the greenback against six major peers, slipped 0.2% to 96.06.


Reuters | Updated: 08-12-2021 21:36 IST | Created: 08-12-2021 21:30 IST
FOREX-Dollar slips as Omicron worries ease; Aussie rises
Representative Image Image Credit: Pixabay

The dollar slipped against several of its major counterparts on Wednesday, as easing concerns about the economic hit from the Omicron COVID-19 variant helped support riskier currencies, with the Australian dollar on pace to notch a third straight session of gains.

The dollar index, which measures the greenback against six major peers, slipped 0.2% to 96.06. The index remains close to the 16-month high hit late last month. "Concerns about Omicron appear to be fading slightly, particularly as increasing – albeit unconfirmed – data emerges pointing to infections caused by the new variant being milder than previously thought," Michael Brown, senior analyst at payments firm Caxton, said in a note.

Investors' appetite for riskier assets improved this week amid reports that people infected with the Omicron variant in South Africa had only shown mild symptoms. Preliminary evidence indicates that the new variant likely has a higher degree of transmissibility but is less severe, top U.S. infectious disease expert Anthony Fauci said on Tuesday.

Commodity-linked currencies, including the Australian dollar, were the main beneficiaries of the improved risk sentiment. The Aussie dollar was 0.5% higher at $0.7152, its highest level in a week.

The recent move by China - a major Australian trading partner - to stimulate its slowing economy was also supportive of the Australian currency, Caxton's Brown said. The Canadian dollar was largely unchanged after the Bank of Canada held its key overnight interest rate at 0.25%, as expected, and maintained its guidance that a first hike could come as soon as April 2022.

The Norwegian crown rose about 1.5% against the U.S. dollar, helped by an improved risk sentiment and steady oil prices. The pound fell 0.4% to a 2021 low and British stocks briefly sank into negative territory on Wednesday after reports that the UK government was set to announce new COVID-19 restrictions prompted investors to dump riskier assets.

Bitcoin continued to recover after Saturday's sharp and sudden plunge. On Wednesday, it was up 0.73% at $50,893.08, as the U.S. Congress hears from top executives from six cryptocurrency firms on the need to tread lightly in imposing new rules on digital assets.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Give Feedback