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The
Australian dollar hit a one-week high, China's yuan jumped to
its highest since May 2018 versus the dollar in offshore trade,
while world stocks were generally higher.
Media reports that Britain was on the point of bringing in more
COVID-linked restrictions pushed the pound and UK stocks lower
but the impact was yet to be felt significantly in offshore
markets.
The dollar index, which measures the greenback against six major
peers, slipped 0.10% to 96.20, while the euro climbed 0.2% to
$1.1289 .
"Attention in FX markets returns to the central bankers and how
they plan to manage the growth versus inflation trade-off," ING
analysts said, pointing to central bank meetings in Canada,
Poland and Brazil, while the U.S. Federal Reserve meets next
week.
The Aussie rose as high as $0.7142 and 81.07 yen, levels not
seen since Dec. 1.
News on the Omicron front had been broadly positive earlier,
with British drugmaker GSK saying its antibody-based COVID-19
therapy with U.S. partner Vir Biotechnology was effective
against all mutations of the new coronavirus variant.
The Reserve Bank of Australia also said Omicron was not expected
to stall the country's economic recovery.
Investors had already cheered comments from the weekend that
cases in South Africa - where the Omicron strain was first
identified - showed milder symptoms.
For the week, Australia's currency is up 1.84% against the
greenback, setting up its best performance in three months.
The Chinese yuan hit the highest since May 2018 against the
dollar in offshore trading, strengthening as far as 6.3440.
"There was no immediate catalyst for the move lower" in the
dollar-yuan pair, but "the general improvement in risk sentiment
as Omicron fears fade is a weight", Commonwealth Bank of
Australia strategist Kimberley Mundy wrote in a research note.
The Canadian dollar marked a two-week high at $1.26325 per
greenback, hours before a Bank of Canada policy meeting.
Economists expect no change at that meeting but forecast rate
hikes as early as the middle of next year.
The U.S. Federal Reserve meets next week and is expected to
increase the pace at which it is tapering stimulus, which would
set up the possibility of earlier rate hikes.
A report on U.S. job openings on Wednesday should provide
further evidence of a tightening labour market.
Money markets are currently fully priced for a quarter point Fed
rate increase by June, though UK futures further cut bets on a
Bank of England rate rise next week.
(Reporting by Tommy WilkesEditing by Alex Richardson and Mark
Heinrich)
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