By Alun John

HONG KONG (Reuters – On Wednesday the dollar dropped again as investors favored more risky currencies and asset types.

The New Zealand Dollar rose 0.8% Tuesday. This is its best day since Oct., rebounding from its October lows to $0.6757. Meanwhile, the Pound gained 0.46% on Tuesday.

The dollar gained 0.44% against the safe-haven yen on Tuesday, keeping pace with oil advances and an increase of 1.6% in MSCI’s stock gauge. [MKTS/GLOB]

It was at 96.441, down from 96.994 the week before, when it was at its 16-month high.

The market players were unable to identify a reason behind the risk-on mood. They claimed that markets had difficulty assessing the effects of COVID-19’s Omicron variation, which led to unpredictable volatility.

Stocks fell sharply on Monday while the dollar index gained 0.7% by Friday.

Although volatility levels for currencies are low during the Christmas week, analysts from ING say that this year there will be some seasonal trends.

The United States Federal Reserve signaled plans to increase interest rates in 2022. However, the European Central Bank resisted any further stimulus.

Omicron-related infections are increasing in Europe, the United States, and Asia. Countries around the globe have begun to consider new measures and increase quarantine periods.

Bloomberg reported that COVID-19 medication pills will be approved by the U.S. Food and Drug Administration. Pfizer The mood may have been helped by Merck and Inc (NYSE:) as soon as Wednesday.

On Wednesday the euro reached $1.1289, marginally up from its previous session.

Emerging market currency traders are bracing themselves for more volatility. On Tuesday, the closed up 6%, after having fallen as low as 8.6% and as high as 18.5%.

The stock price was stable at $49,000, after Tuesday’s gain of 4%. Ether (the second-largest cryptocurrency worldwide) has been also increasing this week. It was last at $4,000.