Australian Dollar Stayed Low Despite Concern Over Omicron

On Wednesday, Yen stayed firm in the volatile market condition. At the same time, the risk-sensitive Australian dollar fell to a one-year low as Federal Reserve Chair Jerome Powell signaled a speedier reduction of stimulus despite the dangers associated with the Omicron COVID-19 variation. Investors, especially the forex brokers are concerned that fast monetary tightening may suffocate the fledgling economic recovery, even though nothing is known about Omicron’s ability to resist existing vaccination protection or its lethality.

Top Japan FX strategist of Bank of America-Merrill Lynch’s Shusuke Yamada said that investors are cautious, and it’s tough to assess Omicron’s influence when there is not much information.

On Tuesday, global stock markets saw a downfall after drug maker Moderna said that the current COVID-19 vaccines will not be that effective against the new variant. BioNTech’s CEO sounded cautiously optimistic, saying the vaccine it develops with Pfizer provides strong protection against severe Omicron disease.

The Australian dollar fell 0.12 percent to $0.71245 on Tuesday after hitting a low of $0.7063 for the first time since November 3, 2020. The New Zealand currency remained relatively unchanged at $0.68195 after hitting a low of $0.6773 in the previous session, its lowest level since early November last year.

The dollar rose 0.09 percent to 113.26 yen, remaining close to 112.535, continuing right from October 11.

A draft testimony by Powell said that Fed policymakers would examine whether to cease bond purchases a few months sooner than expected at their policy meeting on December 14-15. The Fed chairman finally reversed a long-held belief that inflation will turn into “transitory.”

Powell expressed optimism that the effect of Omicron will be significantly less than it was when the pandemic broke out in the spring of 2020. As a result, traders increased their expectations for interest rate hikes, with money markets now virtually high prices to tighten during the June meeting. You can learn more about the features, services, and pricing, of the top forex brokers, a list suitable for you.

The dollar index that measures the greenback with six major currencies was trading at 95.921 on Wednesday after falling to 95.544 on Tuesday, November 18, dragged down by an unwinding of negative bets on the euro; the basket’s most heavily weighted component.

Westpac advises investors to purchase the index on declines down to the mid-95 area. The euro fell 0.04 percent to $1.1331 after hitting a two-week high of $1.1387 high quickly. Sterling last changed hands at $1.32955, not far from an 11-month low of $1.31945 set overnight.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

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