The US dollar was on alert against several major currencies today following concerns among investors over the contagion of the fast-spreading Omicron variant in the United States with the first case being recorded. At the same time, the market also expressed concern over the steps that the Fed will take to reduce bond purchases.
The US dollar index, which measures the US dollar against major currencies, posted losses even ahead of the November NFP reading on Friday.
According to financial analyst Simon Harvey that there is a possibility that the US economy, the U.S. to record a large increase in employment and it could push the US dollar to trade stronger. However, the impact of the NFP reading is likely to be off ahead of the December tapering and Omicron concerns.
The United States which recorded the first case of the Omicron variant on Wednesday has begun to make an impact on the market. The United States and Germany along with countries around the world plan to impose stricter Covid-19 restrictions.
The US dollar index traded lower before the market opened before trading flat at 96.015 against major currencies.
The US dollar began to decline from a 16 -month high of 96,938 after news of Omicron began to emerge.
At the same time the movement of the US dollar was also impacted by the state’s initial unemployment benefit claims data that rose 28,000 to 222,000 for the week ended Nov. 27. But this number is less than analysts' forecasts.
Analysts believe the euro is still favored by the market at the moment but some analysts believe that the euro is weakening due to weak economic fundamentals and interest rates.
Market players are waiting for more clarity on how quickly the Fed will reduce its asset purchases. Fed Chairman Jerome Powell reiterated in testimony to Congress on Wednesday that he and fellow policymakers would consider faster action at the Dec. 14-15 meeting.
