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.

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