The dollar edged lower on Wednesday while The Australian dollar hit its highest level in a week against safe-haven currencies, the dollar, and the yen.
Investors embraced a pick-up in risk appetite on signs that Omicron may be less severe than other COVID-19 variants, thus not derailing the global economic recovery.
The Dollar Index, which tracks the greenback against a basket of six other currencies, fell 0.2% to 96.205, trading in the middle of its recent range.
GBP/USD edged lower to 1.3238, USD/JPY fell 0.1% to 113.44, while the EUR/USD rose 0.2% to 1.128. The Aussie rose as high as $0.71425 and 81.07 yen, levels not seen since Dec.
It gained over 1.7% over the last week, marking its best performance in three months.
Head of FX strategy Ray Attrill at National Australia Bank (OTC:NABZY) wrote in a note, “Markets continue to travel with a good deal of optimism that Omicron will not have the severity of prior variants in terms of health outcomes, even if it is more transmissible.”
The S&P/ASX 200 VIX, measuring the implied volatility of S&P/ASX 200 options, climbed 5.28% to 13.981.
In addition, a study by South Africa on Tuesday suggested that Pfizer’s (NYSE:PFE) booster dose of the COVID-19 vaccine and partner BioNTeech (NASDAQ: BNTX) could help fend off Omicron infections.
USD/CNY fell 0.2% to 6.3538 while USD/CAD rose 0.1% to 1.2651 ahead of the Bank of Canada policy meeting later Wednesday.
Following a two-decade high spike in inflation, Poland’s central bank is expected to lift interest rate hikes at Wednesday’s meeting.
USD/PLN fell 0.1% to 4.0587 while EUR/PLN climbed 0.2% to 4.5842.
Policy decisions will be delivered by the US Federal Reserve, the Bank of England, and the European Central Bank next week.
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