US Dollar soars as Omicron jitters jump amid rate-hike talks



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US Dollar soars as Omicron jitters jump amid rate-hike talks

On Friday, the US Dollar Index (DXY) measured against a basket of six major currencies on an average jumped as much as 0.7 per cent amid a wide-spread risk-aversion trend among the investors, as major Central Banks across the globe including the US Federal Reserve had been engaged in talks of potential rate-hikes in a bid to calm down a torrential build-up in price pressures, while concerns over a rapidly spreading Omicron variant had prompted market participants to ditch out riskier assets.

Aside from that, following Friday’s gains, the US Dollar Index had pared all of the losses it had incurred since last December 14-15 US Fed policy meet. In point of fact, on Wednesday, the US Federal Reserve had told in a statement followed by its two-day long December policy meet that the US Central Bank would double up the rate of its bond taper with aims to conclude the program by March 2022, which eventually had signalled at least three rate hikes each in 2022 and 2023.

On top of that, Fed Chair Powell was quoted saying that the economy was closing in on a maximum employment, which in effect had spurred up optimism on riskier assets, downsizing appetite for the greenback.

Dollar leapfrogs as Omicron dampen outlook for riskier assets

Citing statistics, in the day’s FX market wind down, British Pound plunged 0.6 per cent to $1.3236 after rising nearly 0.8 per cent a day earlier following a BoE decision to hike its benchmark borrowing cost to 0.25 per cent from a prior 0.10 per cent, while the bloc’s common currency euro shed 0.8 per cent to $1.1239, shedding all of its previous session’s gains.

Commodity linked loonies such as Aussies fell 0.8 per cent to $0.7124 and Canadian Dollar dwindled 1.0 per cent to $1.2895, marking off its largest intra-session decline in three weeks, as crude oil faltered as much as 2.0 per cent on frets that a rapidly spreading Omicron variant would taunt demand outlook.

Nonetheless, the greenback was mostly flatlined against safe-haven Japanese Yen to 113.64 yen per Dollar, though the US Dollar Index had logged a weekly percentage gain of 0.65 per cent, marking off the biggest weekly rise in more than a month.