LONDON: The dollar ticked up against major rival currencies in holiday-thinned trading on Thursday, as investors remained cautiously optimistic about the economic consequences of a surge in cases of the Omicron coronavirus variant.
Reuters data shows global COVID-19 infections hit a record high over the past seven days but, comforted by data suggesting the virus may turn out to be milder than in previous waves, many governments have resisted imposing widespread new lockdowns.
The dollar index, which measures the greenback against major peers, rose 0.11% to 95.924 as US equity futures pointed to yet another upbeat session on Wall Street after new record highs on Wednesday.
“There’s definitely cautious optimism around, though the dollar is mostly just recovering the ground it lost yesterday afternoon (after the trade data) rather than anything more substantial,” said Kit Juckes, head of FX strategy at Societe Generale in London.
The US trade deficit in goods mushroomed to the widest ever in November as imports of consumer goods shot to a record ahead of the second straight COVID-distorted holiday shopping season, while exports slipped after a historic gain a month earlier.
“Optimism, I think, can be seen in USD/JPY pulling away from 115,” Juckes added, as the Japanese currency fetched as high as 115.205 per dollar, its lowest in a month and not too far from its November trough of 115.51. The euro recouped some morning losses but was down 0.09% at $1.1341 after touching a month high on Wednesday.
Sterling gradually turned positive and was up 0.17% at $1.35105 during midday trading in London.
The Turkish lira continued to slide and was down 3.1% at about 13 per dollar, after having fallen 6.9% on Wednesday.
Bitcoin steadied after two days of losses. The world’s largest cryptocurrency was last up around 2.5% at $47,635, having been trending lower since hitting an all-time high of $69,000 in November.
EURO ZONE YIELDS
German government bond yield cautiously retreated from an almost two-month high, after rising in the previous days as fading fears about the economic impact of the pandemic boosted risk appetite.
Investors focused on the upcoming withdrawal of central banks’ pandemic-time stimulus, taking the view that the European Central Bank would be less hawkish than the US Federal Reserve.
Italy’s 10-year government bond yield fell 1 basis point (bps) to 1.153%, while Germany’s 10-year benchmark yield was down 0.5 bps at -0.192%.
Italian government bond prices underperformed their peers in the previous sessions as markets worried about the country’s political stability should the former ECB chief Mario Draghi leave his job as a prime minister to become Italy’s president.
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