© Reuters
By Peter Nurse
Investing.com – The dollar gains positions this Monday, driven by the increase in the yield of US Treasuries, as traders consider the strong movements on Friday after the discovery of the new variant of the Omicron coronavirus to be exaggerated.
At 8:55 a.m. (CET), the, which follows the evolution of this currency against a basket of six other major currencies, rises 0.2% to 96.310, after registering a week-long lows on Friday at 95.973.
The pair rose 0.1% to 113.42 after the yen, which had been the biggest beneficiary of Friday’s flight to quality stocks, rose a whopping 2% on Friday, falling the pair to the level of 113.05.
The pair fell 0.4% to 1.1271, while it fell 0.1% to 1.3329, compared to Friday’s 11-month lows of 1.3278, while that the, very risk-sensitive, points a rise of 0.3%, to the level of 0.7147, and recovers after the fall of 1% on Friday, which led it to fall to 0.7112 for the first time from August 20.
The World Health Organization said Sunday that it is not yet clear whether the new variant of the Omicron coronavirus is more transmissible compared to other variants or whether it causes more serious illness.
Health experts in South Africa, where the new variant was first detected, have indicated that the symptoms of the Omicron variant have been mild so far, although they also note that its population is relatively young and that the number of infections in vaccinated people it has been quite significant.
Vaccine manufacturers have indicated that they will be able to reformulate their drugs in no time, prompting traders to undo many of Friday’s sudden moves, which were more abrupt because they occurred on a day when liquidity was tight due to to the bridge on the occasion of a national holiday in the United States.
The 10-year benchmark US Treasury yield has risen 7 basis points to 1.54%, but currently stands at 1.52%, after falling 16 basis points on Friday, the biggest drop since March 2020.
Aside from the news around the Omicron variant, “the general environment in currencies remains quite favorable for the dollar, as the FOMC minutes and a barrage of good data have kept market speculation alive about faster tapering. than expected and an earlier monetary policy tightening, “ING (AS 🙂 analysts say in a note. “In addition, the worsening contagion situation in Europe and the risk of new containment measures are generating a greater divergence of monetary policy expectations between the ECB and the Fed.”
Several European Central Bank officials, including President Christine Lagarde, will appear on Monday, and investors will seek clues about the central bank’s stance ahead of their December 16 meeting. Isabel Schnabel, a member of the ECB’s board, has said the bank believes inflation will peak this month. Throughout the morning, preliminary data for German inflation for November will be released.
ECB officials will receive new forecasts that will likely indicate a rise in inflation at a faster rate than previously anticipated, but will also have to weigh the dangers posed by the pandemic following the reimposition of lockdown measures in some parts of Europe and the discovery of the new variant of the virus, Omicron.