Kevin Buckland

TOKYO, Reuters – On Wednesday the Australian dollar reached its highest level for a week. This was due to a rise in risk appetite based on Omicron’s potential severity relative to other COVID-19 variants but it is still susceptible to vaccines.

For the first time since Dec. 1st, it rose to $0.7124 and was traded at 80.80yen. That’s not far off Tuesday’s peak of 80.93.

GSK, a British drugmaker, stated Tuesday that the antibody-based COVID-19 treatment with U.S. company Vir Biotechnology (NASDAQ) was effective in combating all Omicron coronavirus variant mutations.

The Reserve Bank of Australia stated that Omicron is not likely to slow down the country’s economic recovery.

The comments made by Anthony Fauci (the top U.S. infectious disease official) that South Africa had seen milder cases of Omicron infection, which was the first to be identified, were already popular with investors. He said, “it does seem like there has not been a great amount of severity.”

Australia’s currency rose 1.71% against the dollar for the week. It is now at its highest performance in three month. The currency has rallied by 2.28% against the yen and is on track to its highest week since October mid-October.

Ray Attrill of National Australia Bank’s FX strategy wrote, “Markets continue traveling with a great deal of optimism Omicron will have no severe health outcomes in terms of healthcare outcomes,” in a client letter.

This has put the risk assets markets in an “ebullient spirit”, lifting stocks and commodities as well riskier commodity-linked currencies like Australian and Canadian dollars.

Canadian dollars traded near their overnight high of C$1.2645 for greenback.

According to a recent Reuters poll, although economists don’t expect any changes at Wednesday’s Bank of Canada meeting, they predict that rate rises will occur as early as mid-2013.

British pounds gained some confidence and settled in the middle part of this week’s trading range at $1.32415

After touching $1.1228 on Nov. 26, its lowest level since Nov. 26, the euro rose 0.05% to $1.12735.

The greenback was measured against six major peer currencies. It was steady at 96.269 for the past two-1/2 weeks, but little has changed.

JOLTS’s report on U.S. jobs openings, due Wednesday, should give further evidence that the labour market is tightening. This could be a reason to place wagers on Fed earlier tightening which could help boost the dollar.

The money markets are priced to receive a quarter-point rate rise by June.