Omicron’s Eurodollar Volatility Soars, Federal Bet

The dollar rose on Wednesday as the euro-dollar volatility reached its highest level this year in response to concerns over the London-Omicron variant, but the dollar found support for new expectations for interest rate hikes.

The dollar index rose 0.03 percent at 0920 GMT to 95.997 after recording the strongest month since June, despite the volatility caused by Omicron.

The euro / dollar volatility level reached its highest level this year, with the euro rising to a two-week high on Tuesday but declining as the dollar rose.

“The one-month EUR / USD volatility achieved has skyrocketed to the highest level of the year as a concern for Omicron, but hawkish comments from Fed Chair Powell swing the dollar,” ING told clients. rice field.

Federal Reserve Chair Jerome Powell has suggested that the central bank could accelerate the pace of declining bond purchases at a meeting later this month. He also told lawmakers that it was time to retire from his explanation of price pressure as temporary.

“This means that the Fed is seeing high levels of inflation not only temporarily but also in the long run, which means the Fed will raise rates,” said Moritz Paysen, Berenberg’s Forex trader. I will. “

The euro fell 0.1% against the dollar to $ 1.1325.

A warning from pharmaceutical company Moderna on Tuesday that existing vaccines are less likely to be effective against Omicron variants than against other strains has led to increased interest in safer assets. rice field.

Later, BioNTech’s CEO said he was cautious and positive, saying that vaccines manufactured in partnership with Pfizer are likely to provide strong protection against serious illnesses caused by Omicron.

Sterling, considered a risk currency, was 0.15 in London’s early trading after falling to its lowest level since December the day before, reflecting concerns about whether the vaccine would work against Omicron variants. It rose by a percentage to $ 1.3318.

The Australian and New Zealand dollars have also risen from their year-long lows after falling last week and Tuesday. Australia bought $ 0.7148 and Kiwi bought $ 0.6844.

The yuan, an indicator of resilience over the turbulent days, reached a six-month high of $ 6.3596, following higher-than-expected manufacturing data in November.

By Joice Alves