Kevin Buckland

TOKYO (Reuters – The dollar closed at a near one-week high against a basket of major competitors on Tuesday. It was supported by the expectation of a hawkish Federal Reserve this week, and continue uncertainty regarding Omicron coronavirus.

The currency was measured against six peer currencies. Monday’s close to 96.416 saw the exchange rate drop, but it had touched 96.450 for the first-time since Dec. 7.

Two-day Fed meeting scheduled for Tuesday will be headlined by a series of central banks that announce policy decisions, such as the European Central Bank (ECB) and Bank of England (BoE), on Thursday and Friday.

Expect the U.S. central banks to make an announcement that it is ending its bond buying stimulus earlier than originally communicated. This could potentially lead to higher interest rates next year.

The money market currently prices a good chance of a rate rise by June and another one as early as November.

The Fed must deliver a surprise that is hawkish, Westpac strategists said in a client letter.

Even if Fed expectations are not met, they still have a lot to offer the ECB. They will be looking to find ways to keep accommodation open after the end of its Pandemic Emergency Purchase Programme, (PEPP), in March.

The strategy said that pullbacks towards the mid-95 mark are good buys, despite the slowing of dollar index growth in recent months.

A Reuters survey of ECB-watchers revealed that half the assets the ECB buys monthly starting April was cut by the ECB.

Following a drop of 1.12605 overnight, the euro was almost flat at $1.12835

The Sterling fell to $1.3210 and remained unchanged from the week before, hovering around the $1.31615 low.

Britain has confirmed the death of the Omicron virus in the UK, Prime Minister Boris Johnson of the United Kingdom said Monday. He made this statement just days after warning of an “ominous tsunami” of Omicron infections.

British scientists reported that Omicron cannot be neutralized by two doses COVID-19 vaccinations.

State media reported Monday that mainland China had detected Omicron infections for the first time.

Dollar traded at 113.545 Japanese yen. This is another safe haven that consolidates in the top end of this month’s trading range.

Risk-sensitive Australian dollars fell 0.2% to $0.71215. This is a slight rebound from Monday’s low of $0.7111.

The leading cryptocurrency bitcoin saw a 1% increase to $47211. This is an improvement on Monday’s $45,750 low, which was the lowest level since December 4, 2018, when it plunged below $42,000.