By Gina Lee
Investing.com – The dollar was up on Monday morning in Asia the U.S. Federal Reserve signaled an earlier interest rate hike of March 2022, while Europe grapples with surging Omicron.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.03% to 96.573 by 10:44 PM ET (3:44 AM GMT).
The USD/JPY pair edged down 0.13% to 113.52.
The AUD/USD pair inched down 0.08% to 0.7118 and the NZD/USD pair edged down 0.16% to 0.6726.
The USD/CNY pair inched up 0.06% to 6.3786 and the GBP/USD pair edged down 0.11% to 1.3227.
Key central banks handed down their policy decisions last week, with the Fed turning hawkish in its latest policy decision. The central bank will accelerate its asset tapering program to end in March 2022 and project three quarter-point rate increases in the same year.
The Bank of England hiked interest rates to 0.25% as it handed down its policy decision, a surprise move as it handed down its policy decision last Thursday. The European Central Bank also announced plans of asset tapering over the upcoming quarters on the same day.
On Friday, Fed Governor Chris Waller said the central bank might raise interest rates “shortly after” the completion of bond purchases in March 2022.
“Waller gave the (dollar index) a tailwind on Friday. Positioning is skewed long in USDs, so the prospect of position squaring into year-end is elevated, while central bank actions are the real issue, headlines on omicron could be seen as the smoking gun for position squaring.” head of research at brokerage Pepperstone in Melbourne Chris Weston, said in a note.
On the COVID-19 front, U.S. President Joe Biden’s top medical adviser Anthony Fauci said a shutdown will not be necessary despite COVID-19 surges again.
However, European countries are imposing more restrictions over the surging Omicron cases. The U.K. is warning that new curbs could be imposed by Christmas, as the country detected 12,000 cases on Sunday. The Netherlands has already gone into lockdown.