Forex Today: Dollar finds its feet amid tepid risk tone, mixed Omicron news


Here is what you need to know on Thursday, December 9:

The market mood remains tepid amid mixed headlines on the Omicron covid variant globally. Renewed geopolitical tensions between US and Iran amid looming American-Sino woes also temper the risk sentiment.

On the Omicron front, a Japanese study revealed that the new variant of COVID-19 is 4.2 times more transmissible in its early stage than Delta. Meanwhile, the UK imposed fresh restrictions to curb the Omicron contagion after a solid surge in cases over the past few days. PM Boris Johnson urged to work from home and have to show proof of vaccination under the new guidance, known as Plan B.

On the other hand, Pfizer Inc. and BioNTech SE said initial lab studies show a third dose of their covid vaccine may be needed to neutralize the omicron variant.

Investors also weigh in fresh US-Iran concerns after Reuters reported, citing a US official that ''US and Israeli defense chiefs are expected on Thursday to discuss possible military exercises that would prepare for a worst-case scenario to destroy Iran’s nuclear facilities should diplomacy fail and if their nations’ leaders request it.”

On the US-Sino side, US House passed a bill to punish China over the oppression of Uyghurs Muslims in the country’s far western Xinjiang region.

The Asian stocks are a mixed bag, rescued by the rally in the Chinese stocks. China stocks cheer the central bank’s policy support measures and moderation in factory inflation. The S&P 500 futures are down 0.15% on the day, justifying the cautious mood.

The safe-haven US dollar attempts a bounce while the Treasury yields hold onto the recent rebound ahead of Friday’s critical inflation data.

The recovery in EUR/USD lost legs just below 1.1350, as the pair now inches lower towards 1.1300 ahead of the German trade data.

GBP/USD is holding steady above 1.3200, consolidating the impressive bounce from a fresh yearly low of 1.3167. The Omicron covid concerns and Brexit risks will continue to undermine the British pound, especially as the latest covid restrictions push back BOE rate hike expectations to early 2022.

AUD/USD is closing in on 0.7200 after finding fresh bids near mid-0.7150s. USD/JPY is holding the lower ground around 113.60 amid sluggish markets and a retreat in the yields.

 USD/CAD is paring back gains to test 1.2650 amid a rebound in WTI prices. The US oil is on the move higher following the US-Iran headlines. The Bank of Canada (BOC) kept the key rate unchanged at 0.25% but warned of elevated inflation, which drove USD/CAD briefly higher, where it is now consolidating.

Gold is trading flat below the critical $1,792 hurdle, awaiting the US weekly Jobless Claims for fresh incentives.   

Bitcoin is battling $50,000, unable to find acceptance above the latter amid a damp mood across the crypto board.

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