Australian dollar and euro recover against US dollar

London

THE euro, Australian dollar and other currencies recovered against the US dollar as traders turned more positive about the economic outlook on Wednesday, even as Omicron cases rocketed and investors braced for more volatility.

Turkey's lira steadied and held its recent gains after a rollercoaster ride in which it charged back from record lows due to President Tayyip Erdogan's new steps to guard Turks' savings against volatility.

Foreign exchange moves were largely small, with trading volumes thinner ahead of the holiday season. After weakening earlier in the session, the euro was last up 0.1 per cent at US$1.13.

The Australian dollar lost as much as 0.4 per cent to US$0.7121 and the New Zealand dollar as much as US$0.6742, but both were up slightly by 1115 GMT, supported by improving risk sentiment as oil and global shares advanced.

Sterling gained 0.3 per cent to US$1.3316, despite data showing Britain's economy grew more slowly than previously thought in the July-September period.

The dollar index edged 0.1 per cent lower to 96.317, though it was still well within its recent ranges.

The weeks on either side of Christmas are typically low in volatility for currencies and other asset classes, analysts at ING said, though "this year some seasonal tendencies will be mixed with the Omicron variant threatening to force new restrictions and markets still processing a week full of key central bank decisions."

Omicron continues to keep traders on edge and infections are multiplying across Europe, the US and Asia, causing countries across the globe to consider new curbs on movement and reimpose quarantine periods for incoming visitors.

But markets are growing confident that the economic fallout from the Omicron variant will be limited.

In emerging markets, Turkey's lira steadied after closing up 6 per cent on Tuesday, having been down as much as 8.6 per cent and up as much as 18.5 per cent. It was last down around 1.4 per cent at 12.57 per dollar, but holding most of its gains after the government move to safeguard deposits. REUTERS