© Reuters. PHOTO FILE: A picture illustration of the US dollar, Swiss franc, British pound and euro banknotes, taken in Warsaw on January 26, 2011. REUTERS / Kacper Pempel
By Tom Westbrook
SYDNEY (Reuters) – Riskier currencies struggled to settle against the dollar on Monday, backed by uncertainty surrounding the Omicron variant and the expectation of warmer US inflation data, which puts upward pressure on interest rates.
Cryptocurrencies have taken care of huge losses from a wild weekend that once crushed bitcoin by more than 20%. found support around $ 49,000 on Monday.
Also saddened by a large drop, the Antipodeans led an attempt at a rebound in early Asian trade, as the mood was aided by preliminary observations from South Africa suggesting that Omicron patients had relatively mild symptoms.
The rose 0.3% to $ 0.7016, scraping off a 13-month low. The rose 0.1% to $ 0.6750.
The safe-haven yen also eased 0.1% on Monday to $ 113.00 with the cautiously brighter mood, though analysts expect a wobbly move forward with trading most likely sensitive to Omicron news and U.S. inflation data on Friday.
The euro was last stable at $ 1.1303 and sterling stabilized at $ 1.3232.
“Perhaps we should look for volatility rather than trend,” analysts at ANZ Bank said. Volatility measures for the battered Aussie and Kiwi on Friday hit their highest in about eight months as two currencies sank. [AUD/]
Little is known about Omicron, now found in about 1/3 of US states, with cases also detected in Europe, Asia and South Africa.
An article by the South African Medical Research Council based on early observations in Pretoria said that the majority of COVID-19 patients had other reasons for admission and were not dependent on oxygen – a better picture than previous viral waves.
Turnovers in the Treasury market have also worried traders in recent sessions as a U.S. yield curve sharpened sharply ahead of expectations that the Federal Reserve will soon move to quell inflation and end up slowing long-term growth.
A mixed U.S. job report last week shook market expectations slightly from more aggressive tension and the consumer price report sold on Friday threatens as another case for an early decline and gave support to the dollar.
The week started steadily at 96,211, within the range of the 16-month November peak of 96,938.
Interest rate futures markets have cost U.S. rates, which are declining around the middle of next year, but only reaching about 1.5% even until late 2026 and traders are wary of that rapidly changing.
“This is hard to reconcile,” said Chris Weston, head of research at broker Pepperstone. “It suggests the market is seeing the Fed stop trading after five rises, much less than the Fed’s median forecasts.”
Weston said an annual inflation rate above 7% – contrary to economists’ expectations of 6.7% – could shake things up.
“Inflation with 7 as the big number would raise the USD higher,” he said. =========================
Currency prices at 0033 GMT
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
Euro / Dollar
$ 1,1299 $ 1,1311 -0.08% -7.51% +1.1327 +1.1299
Dollar / Yen
112.9150 112.8500 + 0.12% + 9.38% +113.0550 +112.9800
Euro / Yen
127.59 127.55 + 0.03% + 0.53% +127.8200 +127.5600
Dollar / Swiss
0.9191 0.9177 + 0.15% + 3.88% +0.9191 +0.9183
Sterling / Dollar
1.3229 1.3232 + 0.01% -3.14% +1.3240 +1.3228
Dollar / Canadian
1.2840 1.2847 -0.06% + 0.82% + 1.2840 + 1.2817
Aussie / Dollar
0.7008 0.7001 + 0.14% -8.87% + 0.7020 +0.6995
Dollar / Dollar 0.6746 0.6748 + 0.05% -5.98% +0.6758 +0.6751
BOJ Tokyo Forex Market Information