Forex Today: Dollar wilts, Gold shines amid Omicron covid optimism, BOC in focus

Dhwani Mehta FXStreet

Here is what you need to know on Wednesday, December 8:

Increasing scientific evidence that the new Omicron covid variant is less aggressive and, therefore, could pose limited risk to the global economic recovery continues to underpin the market mood. The Asian stocks tracked the rally in Wall Street overnight while the S&P 500 futures advanced 0.40% so far.

South African hospitals continue to hint that Omicron has milder symptoms. Additionally, a South African Study showed that the Pfizer vaccine provides partial protection against the new strain. The scientist noted, “study shows a 40-fold reduction in neutralization capacity of Pfizer vaccines vs. Omicron.

China’s policy support to boost economic growth and help the country’s distressed property sector also keep the upbeat tone intact for the third day in a row.

The risk-on flows dulled the US dollar’s appeal as a safe haven, fuelling a relief rally across the fx board. The US Treasury yields softened amid pre-inflation data anxiety, adding to the weight on the buck.

Against this backdrop, EUR/USD outperformed and almost tested 1.1300, as the rebound extends despite the mixed German ZEW data and ECB-speak.

GBP/USD is consolidating its bounce around 1.3250, as bulls remain cautious amid rising Omicron cases in the UK. The Kingdom reported 101 new cases of the Omicron variant, taking the total cases to 437, as of Tuesday. Additionally, the Brexit stalemate will likely cap the further upside in cable.

AUD/USD is holding onto the latest upside but remains capped below 0.7150 despite the yuan hitting three-year highs against the greenback.

USD/JPY is battling 113.50 amid softer yields and the dollar. USD/CAD is posting small gains around 1.2650 amid a pullback in WTI prices, ahead of the key Bank of Canada (BOC) decision. The BOC is expected to keep the key rate unchanged at 0.25% amid rising inflation.

The US oil fails to take advantage of the US-Russia geological tensions, especially after President Joe Biden warned his Russian counterpart of ‘strong measures’ amid Ukraine invasion fears.

Gold is testing the critical $1,792 barrier, at fresh weekly highs.

Bitcoin is battling $50,000, as bulls contemplate the next move amid news that Google disrupted a massive botnet used by hackers to mine crypto using the Bitcoin blockchain.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD keeps the bid bias near 1.3550

GBP/USD leaves behind part of the recent three-day retracement and hovers around the 1.3550 region on Monday. The Greenback’s fresh downward trend helps Cable and the rest of the risk complex recoup part of the recent ground lost while attention remains on the potential Fed rate path.

EUR/USD retakes 1.1600; looks at the 200-day SMA

EUR/USD manages to gather fresh steam and advances past the 1.1600 hurdle as Monday’s NA session draws to a close. Indeed, the pair patially reverses Friday’s sharp retracement amid the renewed downside momentum in the US Dollar. Moving forward, the flash Inflation Rate in the euro zone and US JOLTs and the ISM Manufacturing should keep investors entertained on turnaround Tuesday.

Gold: Is the bullish run over?

Gold adds to Friday’s marked decline, although it has managed to bounce off earlier lows in the sub-$4,400 region per troy ounce on Monday. The yellow metal’s pullback comes despite the softer stance in the US Dollar and steady uncertainty in the Middle East, although rising yields keep bulls at bay for now.

Bitcoin and Gold Outlook: BTC clings to support, XAU slides as US-Iran tensions re-escalate

Bitcoin (BTC) maintains stability above $78,000 support on Monday as crypto prices broadly consolidate. Gold (XAU/USD), meanwhile, holds above $4,400, marking two consecutive days of declines. Sentiment in the broader cryptocurrency market remains broadly positive, with the Fear & Greed Index holding at 62 on Monday, down slightly from 69 the previous day.

Oil rallies on fresh persian gulf strikes

Energy prices are trading firmer this morning after the US carried out targeted strikes against Iran, drawing retaliatory strikes and reinforcing concerns about a prolonged stalemate in the Persian Gulf. Oil prices started the week stronger following the first military strikes between the US and Iran in a month. ICE Brent briefly moved back above US$90/bbl in early morning Asia trading.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.