Kevin Buckland

(Reuters] – Friday’s dollar gains were accompanied by a generally calmer mood in the markets, as worries over Omicron’s effect eased. But currency movements were restrained ahead of a U.S. payrolls report which could open up new avenues for Federal Reserve interest rates hikes.

South African scientists who first identified the Omicron variant of Omicron last month said that current vaccines could still be used to protect against serious disease and death. All three Omicron cases in America showed mild symptoms.

On Thursday, Fed officials spoke alongside Chair Jerome Powell to take hawkish positions. Mary Daly, San Francisco Fed President, said it was time for the Fed to start “creating a plan” in order to increase rates to fight inflation. Thomas Barkin, Richmond Fed President, supported “normalizing” policy.

Tapas STrickland, an economist at National Australia Bank (OTC), stated in a client note that Fed talk over the weekend was “undeniably hawkish”.

Omicron headlines were net positive overnight. This helped risk sentiment recover. But, Strickland warned that there is still uncertainty about the effectiveness of existing vaccines.

For the third day in a row, the dollar edged up, climbing 0.03%, to 96.117. Even though Tuesday’s sharp decline saw the dollar drop by 0.03%, it is unchanged over the course of the week. The index plunged by 0.70% on Friday, its lowest point since May.

In testimony before Congress Wednesday, Powell stated that Powell and other policymakers would consider taking faster action during their December 14-15 meeting.

According to a Reuters poll, economists estimate that the United States has created 550,000 jobs in January. This is a continuation of strong data.

The money market believes that there are high chances for the Fed to raise its target rate by quarter of a point during their June meeting.

On Friday, the dollar fell 0.09% to 113.10 Japanese yen. However, this was after an overnight gain of 0.4%.

After falling to $1.1186, almost 17 months ago, the euro was unchanged at $1.13025.

A fourth session of losses saw the risk-sensitive Australian Dollar fall 0.12% to $0.7084.

The European Central Bank (ECB) and the Reserve Bank of Australia (RBA) have maintained dovish positions, rebutting market expectations that policymakers would be forced to yield to inflationary pressures.

“We continue to expect near‑term AUD moves will be driven by Omicron and the risk remains a dip below $0.7000,” Commonwealth Bank of Australia (OTC:) strategist Joseph Capurso wrote in a report.

Capurso explained that Friday will see “the U.S. Labour Market take center stage”. This should help to keep the currencies markets quiet.