The US dollar rose on Friday as traders retreated from riskier currencies amid talk of interest rate hikes by central bankers and concerns about the spread of the Omicron variant of SARS-CoV-2.
The US dollar index against major currencies rose 0.66 percent to 96.67, posting a weekly increase of 0.65 percent and recouping all of the value it had lost on Thursday following a series of central bank policy statements.
The New Taiwan dollar rose against the US dollar on Friday, gaining NT$0.037 to close at NT$27.780, but was down 0.16 percent from NT$27.737 a week earlier.
Photo: Reuters
The euro and British pound fell 0.8 percent and 0.65 percent respectively, after having booked gains the two previous days. The euro ended at US$1.1239 and the pound at US$1.3236.
Commodity-linked currencies, including the Australian and Canadian dollars, also lost value as crude oil prices fell 2 percent on worries that the Omicron variant could dampen demand.
The Aussie dollar fell 0.82 percent to US$0.7126, while the Canadian dollar traded 0.93 percent lower at US$0.7755, in its biggest decline since Nov. 26.
The US dollar was flat against the Japanese yen.
The risk of reinfection with the Omicron variant is more than five times higher than the Delta variant and has shown no sign of being milder, a new study from England showed.
The findings were released as European countries weigh further travel and social restrictions.
In the US, Federal Reserve Governor Chris Waller said an interest rate increase would likely be warranted “shortly after” the Fed ends its bond purchases in March.
Traders are comparing changing interest rates across currencies as central banks go at different speeds to adjust monetary policies in the face of increasing signs of persistently high inflation and the Omicron threat.
The spread between yields on two-year government securities of the US and Germany widened through the day to its biggest gap in a week and reflected the euro’s weakness.
Some analysts have cautioned against reading too much into changes in exchange rates at this stage. With the central bank meetings out of the way, “we think there will be little informational value in price action in coming days,” strategists at TD Securities said in a note to clients on Thursday.
“The USD can consolidate into year-end as FX markets work off some residual positioning/value excesses,” they added.
Additional reporting by CNA, with staff writer
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