The US dollar is on the back foot as risk appetite picks up again. , GBP/USD is printing back in the green at 1.32537 after climbing from a low of 1.3231 to a high of 1.3254 in Asia so far. The US dollar is sliding and trades down some 0.11% as measured against six major rival currencies in the DXY index.
The Benchmark 10-year and 30-year US Treasury yields have pulled back from their one-week highs hit on Tuesday and are sliding further in Asia which is pressuring the greenback. Most other asset classes are in the green with Japanese shares rebounding as investors stay hopeful that the Omicron coronavirus variant may be less disruptive for the global economy than initially feared.
South Africa was the first country to detect the Omicron variant, since then it has dealt with a massive surge in coronavirus cases. But in the last few days, the trend gave the impression that the situation was improving. For many, this has been highly encouraging. However, levels in testing are not constant so the data is hard to ratify. Nevertheless, the signs, so far, are that the variant is not any more severe than other variants of covid-19 and for now, markets are cheering that.
Meanwhile, traders are looking to the Bank of England that is now expected to hold off again next week on becoming the world’s first big central bank to raise interest rates from their pandemic lows. On Tuesday, investors were pricing in a roughly 50% chance of the BoE raising Bank Rate to 0.25% on Dec. 16 This lower from around 75% last week but higher than just a one-on-three chance immediately after the speech by MPC’s Michael Saunders on Friday.