Saturday, March 2

Dollar begins 2022 strong as COVID-19 rattles on

Despite the dollar’s strength on Monday morning in London, holidays in many Asia Pacific markets meant that 2022 started quietly. Due to holiday closures in Japan, China, Australia, and New Zealand, and thin trade, it’s difficult to determine the real movements in the dollar.

In addition, as the global spread of the Omicron COVID-19 variant continues to impact sentiment, investors are seeking safe-haven assets. Despite the decline in cases in Xi’an, Johns Hopkins University data shows that there were 290 million cases worldwide as of January 3.

The U.S. Dollar Index, which measures the greenback against a basket of other currencies, was up 0.29% to 95.870 in early London trading.

Read: Why it is risky to convert your naira to dollars or USD(T)

However, to reach the 38.2% Fibonacci retracement of October-November upside, the US Dollar Index bears must break the immediate support line near 96 index points. The USD/JPY pair was up 0.19% to 115.30.

In 2021, the dollar enjoyed its best year since 2015. An improving U.S. economy and persistent inflation led the Fed to become more hawkish, and the Fed is now expected to begin raising interest rates as soon as March.

The Canadian dollar was the best performer against the dollar in 2021, as it was almost flat for the year on expectations that the Bank of Canada will start tightening its monetary policy in January.

Read: Access Bank creates dollar debit card to access forex outside Nigeria

Japan’s yen has been the worst performer among the major currencies in 2021, falling around 10% against the greenback.

Euro, which makes up the biggest weighting in the dollar index, was down a little more than 7% in 2021, with the European Central Bank (ECB) “supporting ultra-dovish monetary policy settings while the Fed accelerates its taper and hikes interest rates”