Dollar Edges Higher Off Range Lows

FxPremiere.com – The US dollar edged higher in early European trade Thursday, but remained near the bottom of its recent range in holiday-thinned volumes as fears over the Omicron Covid-19 variant continued to subside.

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At 1:45 AM ET (0645 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 96.105, helped by rising U.S. Treasury yields, with benchmark 10-year yields hitting 1.56% on Wednesday, the highest since late November.

Reuters data shows global COVID-19 infections hit a record high over the past seven-days.

“Markets continue to price in finishing Omicron fears thanks to low hospitalisations. That has encouraged investors out of defensive positioning and back into the global recovery trade,” said Jeffrey Halley, a senior market analyst for Asia Pacific at Oanda.

The Japanese currency was fetching 115.05 per dollar, its lowest in a month and not too far from its November trough of 115.51, a four-and-a-half-year low. Halley also attributed the yen’s weakness to Japanese investors deploying cash offshore.

Sterling reached as high as $1.3505, its best mark in six weeks, before meeting resistance and falling back. The riskier Australian dollar continued to inch higher to $0.72585.

The euro slipped 0.15% to $1.333 after touching a month high on Wednesday.

The shift away from the safe haven yen and towards the Australian dollar was also in keeping with moves in other asset classes. The S&P 500 and the Dow Jones Industrial Average closed at all-time highs on Wednesday, the latter rising for a sixth session.

But with many traders away ahead of the year-end, analysts cautioned against reading too much into the moves, and rising U.S. yields helped put a floor under the dollar, preventing sharp price swings.

Benchmark 10-year yields reached 1.56% on Wednesday, the highest since Nov. 29, in U.S. trading after the Treasury sold $56 billion in seven-year notes to weak demand. [US/]

They last yielded 1.5462%.

The Turkish lira was at 12.7 per dollar having fallen 6.9% on Wednesday in another volatile day.

Despite surging more than 50% last week following state-backed market interventions, it has lost 40% of its value this year. However, Turkey’s Finance Minister Nureddin Nebati said on Wednesday that the current swings in the lira were not worrying and that it would return to normal levels.

EURUSD traded at the year’s high

USD/JPY rose 0.2% to 115.16, at a one-month high and not far away from the 115.51 level it reached in November.

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Dollar Edges Off Three Week Lows

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Investors will focus on the release of weekly initial jobless claims later Thursday for further evidence that the U.S. economic recovery continues despite the rising number of Covid cases.

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Initial unemployment claims totaled 205,000 in the week ended.

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The claims figure is expected to be largely unchanged, at 8:30 AM ET (1330 GMT), illustrating the low levels of job losses seen in recent months as employers focus on attracting and retaining workers to keep pace with consumer demand.

USDJPY Price May Break Out

Elsewhere, USD/TRY rose 5.8% to 13.3723, with the lira giving back some of last week’s hefty gains after President Recep Tayyip Erdogan announced a scheme to protect lira deposits against currency volatility.

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The Turkish lira had previously fallen to record lows on the back of the central bank slashing its policy rate by 500 basis points since September even though inflation soared above 20%.

Dollar Edges Higher Off Range Lows

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Dollar Edges Higher Off Range Lows

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