Omicron’s Concerns Support U.S. Dollar

The dollar strengthened Monday morning with the uncertainty of the new COVID-19 virus strain and with U.S. inflation data expected to be hotter. Which could increase the pressure on interest rates.

The U.S. dollar index against a basket of other currencies rose 0.16% to 96.270.
The USD/JPY pair rose 0.17% to 113.
The AUD/USD pair was up 0.30% to 0.7022.
The NZD/USD pair was up 0.28% to 0.6758.
The USD/CNY pair was down 0.11% to 6.3689.
The GBP/USD pair rose 0.03% to 1.3236.

Omicron has found access to about one-third of U.S. states, although researchers are still puzzling over how the rapid infection numbers come about. In addition, data on the new strain must be collected to determine treatment guidelines and test the vaccine’s effectiveness.

Add to that mixed U.S. employment reports last Friday. Whether the latest figures can persuade the Fed to change its monetary policy remains to be seen. Consumer price index figures due this week are expected to support the outlook and give the dollar a stronger appreciation.

Interest rate futures have pegged a rise in U.S. rates for mid-2022, up to 1.5% up to the end of 2026, and investors are still wary of sharp changes.

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