Dollar remains Stable

The dollar remained essentially unchanged on Thursday. The safe-haven Japanese yen was in higher demand as concerns about the Omicron COVID variant grew, weighing on the South African rand and the Australian dollar.

Concerns were heightened late Wednesday by the news that the United States had recorded its first case of the Omicron variant. The new variant became the dominant strain, accounting for nearly three-quarters of cases. Much is unknown about the new variant, which has spread to at least a dozen countries in less than three weeks. Still, the World Health Organization said Wednesday that it expects more information on its transmissibility within days. However, Paul Kelly, Australia’s Chief Medical Officer, stated that there was no evidence that it was more dangerous than the Delta variant.

The central bank is planning to consider a faster tapering of its bond-buying program at its December meeting leads to earlier interest rate hikes.

The weekly initial jobless claims, another indicator of the health of the U.S. labor market, are scheduled for release on Thursday. It comes on the heels of ADP private payrolls increasing 534,000 in November. It was less than in October but more than expected, ahead of the much-anticipated government jobs report on Friday.

Currencies

The Dollar Index (DXY) measures the value of the U.S. dollar against a basket of six other currencies. It rose slightly to 96.090 after settling in the middle of its range for the past two weeks.

EUR/USD fell slightly to 1.1315, GBP/USD rose 0.2 percent to 1.3299. USD/JPY rose 0.4 percent to 113.23, a slight recovery from Tuesday’s low of 112.53, a level not seen since Oct. 11.

The risky AUD/USD rose 0.1 percent to 0.7110, not far from Tuesday’s low of 0.7063, its lowest level. The USD/ZAR fell 0.3 percent to 15.9760, following a more than 1% surge overnight. “G7 F.X. volatility is at an all-time high for the year, and it’s easy to see why. The discovery of the Omicron variant has introduced a new and previously unknown risk premium into global asset markets in the last week.

The USD/TRY rose 1.5 percent to 13.4581. The lira traded near record lows after President Recep Tayyip Erdogan abruptly replaced his finance minister, Lutfi Elvan. This implied divisions within the administration over the administration’s policy of aggressive interest-rate cuts despite raging inflation.

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