On Tuesday, the euro rose on track for this year’s biggest three-day rising streak. Traders cut their short positions after Moderna’s CEO said his opinions on COVID-19 vaccines might not be effective against Omicron.
Risk appetite appeared across all markets for a second day in a week. His comments strengthened expectations that the global economy is ready for a return to normality in the following months.
On Tuesday, that was apparent in the jump in the euro’s value as traders hurried to cut their bets on the U.S. Federal Reserve, increasing interest rates faster than its global rivals next year.
An FX strategist at Societe Generale in London, Kenneth Broux, said that U.S. rate hike bets undermine the dollar, while there is a possibility of short euro covering as well.
Forex Market Overview
Money markets reshaped their expectation of a 25 basis-point rate hike to September next year.
On Tuesday, the euro increased 0.51% to $1.1368 against the U.S. dollar. It remained up 1.31% in the last few sessions. The single currency recorded its biggest three-day rising streak at an intraday high of $1.1374 hit since the end of 2020.
Since the beginning of October, the Japanese yen rose 0.61% versus the dollar to its highest levels at 112.69 yen.
Mizuho strategists said in a client note that comments from Moderna CEO reinforced Market members’ concerns over a disruptive outcome for the global economy.
The Australian dollar slipped 0.66% to a new low of $0.7094. Moreover, the New Zealand dollar fell 0.7% to $0.6784. This was after the interview headed for its worst month since the beginning of 2015.
Before Omicron’s appearance, the major driver of currency movements was traders’ perception of which global central banks would raise interest rates and end pandemic-period stimulus.