Dollar Up as Investors Continue Assessing Omicron’s Impact

The dollar was down on Wednesday morning in Asia, but moves were small as investors continued assessing the impact of the omicron COVID-19 variant on the global economic recovery.

The US Dollar Index that tracks the greenback against a basket of other currencies inched up 0.01% to 96.498 by 10:25 PM ET (3:25 AM GMT).

The USD/JPY pair inched up 0.02% to 114.11. The Bank of Japan released the minutes from its latest meeting earlier in the day.

The AUD/USD pair edged down 0.24% to 0.7136 while the NZD/USD pair edged up 0.21% to 0.6749.

The USD/CNY pair inched up 0.01% to 6.3723 and the GBP/USD pair inched down 0.05% to 1.3259.

The euro was down marginally at $1.1277 starting Wednesday.

With omicron spreading across Europe, the U.S., and Asia, some countries are considering re-imposing restrictive measures.

British Prime Minister Boris Johnson urged people to be cautious but ruled out tighter restrictions ahead of the holidays. Meanwhile, in Germany, gatherings will likely be limited to 10 people and France will limit New Year’s Eve celebrations.

News that U.S. Food and Drug Administration could authorize COVID-19 treatment pills from Pfizer Inc. (NYSE:PFE) and Merck & Co . Inc. (NYSE:MRK) as early as this week boosted investor sentiment, however.

Typically, currencies’ volatility is low in the weeks ahead and after Christmas, but “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,” ING analysts told Reuters.

Also contributing to improving sentiment, U.S. President Joe Biden is optimistic about reaching a deal with Senator Joe Manchin to push the $1.75 trillion Build Back Better bill through Congress.

Meanwhile, the Turkish lira is bracing for another volatile day. The currency closed up 6% on Tuesday, having fallen as much as 8.6% and risen as much as 18.5%.