Euro, US dollar steady as Omicron fears wane

London

THE euro, sterling and US dollar stabilised on Thursday (Dec 9) amid hopes some Covid-19 vaccines might be able to neutralise new coronavirus variant Omicron. Analysts said the focus was shifting back to monetary policy.

Some of the fears around the Omicron variant ebbed after BioNTech and Pfizer said 3 shots of their Covid-19 vaccine neutralised it in a laboratory test.

Analysts said if the test results prove to be accurate, markets would continue to shift their attention back to what central banks' next move will be, which had been major factor shaping currency markets in recent weeks.

The euro was 0.2 lower at US$1.1319 at 5.15 pm, Singapore time, still close to one-week high touched in the previous day.

The US dollar, against a basket of currencies, edged 0.15 per cent higher to 96.082, some way from the 16 month high of 96.938 touched in November, as investors waited for a key Federal Reserve policy meeting due next week.

Expectations of an unwinding of US monetary stimulus measures had helped the US dollar index rise in November, before Omicron's emergence sent it lower.

Sterling was little changed at US$1.3207, after touching new 2021 lows the previous day versus the US dollar, as British Prime Minister Boris Johnson imposed tougher Covid-19 restrictions in England, ordering people to work from home, wear masks in public places and use vaccine passes.

One of the key winners from the improvement in Omicron-related sentiment this week has been the Norwegian crown, which jumped to an almost 3-week high on Wednesday. It was last down 0.75 per cent on the day at US$8.9400.

The Canadian dollar was largely unchanged after the Bank of Canada held its key overnight interest rate at 0.25 per cent, as expected, and maintained its guidance that a first hike could come as soon as April 2022.

China's yuan hovered at a more than 3½-year high against the US dollar on continued year-end seasonal corporate demand, though some investors were growing cautious over how much more Beijing would allow the currency to appreciate.

Bitcoin slipped 2.2 per cent to just below US$49,515 as it continues to trade in a narrow range after a sharp weekend plunge. REUTERS