HONG KONG- The dollar was quiet at the start of a week in which central bank meetings, including by the Federal Reserve, will likely drive currency markets, while sterling fell slightly after Boris Johnson warned about the impact of the new COVID-19 variant.
The dollar index, which measures the greenback against a basket of six major peers, was little changed at 96.091, down from as high as 96.938 in mid November, before news of the omicron variant of the new coronavirus became widespread.
On Monday, the euro inched higher to $1.1316 while the yen lost a little ground to 113.51 per dollar.
The pound slipped 0.1 percent to $1.3257 after British Prime Minister Johnson on Sunday said Britain faces a “tidal wave” of the Omicron variant of coronavirus and that two vaccine doses will not be enough to contain it.
Markets have swung widely since the new strain emerged due to worries it could have a major impact, initially driving flows to safe-haven assets. Reports that it may not be as bad as feared caused these flows to reverse last week.
“All I want for Christmas is clarity,” analysts at Barclays headlined a research note.
Breaking news about the Omicron variant aside, the most significant scheduled events for currency markets this week are central bank policy meetings, with six of the G10 central banks and a number of emerging-market central banks set to meet.
“Central banks will need to strike a difficult balance between Omicron-induced uncertainty and elevated inflation levels,” the Barclays analysts said.
The most important is the Federal Reserve’s two day meet which wraps up on Wednesday.
