The euro strengthened against the dollar. Dropping yields on US government bonds were a major blow to the overbought dollar. On Tuesday, much higher inflation figures from the euro zone supported the rising momentum on the shared European currency.
Last week, the British pound bottomed around the 1.33 level on heightened tensions between the UK and France over the migrant crisis and fisheries but recovered on Tuesday.
The Japanese yen strengthened as forex traders attempt to assess how the new South African coronavirus variant will affect global economic activity, which boosted “risk off” sentiment. Falling US Treasury yields are weighing on the dollar. Overall, the US dollar index retreated but is still above 95 points.
Gold prices traded in a narrow range around the $1,800 level. Inflation concerns are helping gold but likely interest rate hikes next year in the US are weighing on gold.
US indexes dropped as fears over the new coronavirus variant prevailed, with investors concerned that global growth could be negatively impacted.
Oil prices were in free fall last week after the US released its strategic petroleum reserves and after fears mounted that the heavily mutated Omicron would spark fresh lockdowns and dent global oil demand following outright bans of flights from countries in Southern Africa. Moderna’s CEO cast doubt on the efficacy of COVID-19 vaccines against the Omicron coronavirus variant on Monday, spooking financial markets and adding to worries about oil demand. OPEC+ will meet on Thursday with the option of putting on hold plans to add 400,000 barrels per day (bpd) to supply in January reportedly on the table.