By Alun John

HONG KONG, (Reuters) – The dollar and yen fell overnight after investors favored riskier currencies over equities.

This could be due to an improvement in sentiment by governments that resist the imposition of new lockdowns across the country, even though the Omicron strain of coronavirus is on the rise.

Reuters data indicates that the number of COVID-19-related infections worldwide has reached a record level in just seven days.

Jeffrey Halley (Oanda’s senior market analyst, Asia Pacific), stated that the U.S. Dollar retreated overnight because markets continued to price in Omicron fear due to low hospitalisations.

This has encouraged investors to move out of defensive position and get back in the global recovery trade.

In early Asian trade, the euro stood at $1.1352 after having gained 0.35% and touched a one-month peak the previous day.

After a 0.4% overnight gain, the sterling reached 1.3500. This was its highest level since Nov. 19.

At 95.862, the value of the greenback against its major peers was at its lowest point in one month.

Analysts cautioned that traders are often away before the end of the year, so they shouldn’t be too influenced by the movements.

Brad Bechtel from Jefferies’ global head FX, stated in a note that “in times like these, we trade very technical as short-term worker try to eek some last year-end gains.”

Bechtel stated that FX flow have been “lighter side than normal for a month”

However, rising U.S. yields https://www.reuters.com/markets/europe/yields-rise-after-weak-seven-year-auction-2021-12-29 put a floor under the dollar.

On Wednesday, benchmark 10-year yields reached 1.56 percent. This was the highest level since Nov. 29. It happened after $56 billion of seven-year Treasury notes were sold to low demand.

The last time they were successful was 1.5496%.

These currencies moved in line with the overall market. According to the risk-on mood the and closed at new highs on Wednesday. The latter rose for a sixth session. [.N]

After hitting a low of 114.95, the safe-haven yen had risen to 114.95/dollar on Wednesday. The November low of 115.51, which was the lowest it had been since 2017 early 2017, marked its lowest point.

After holding onto recent gains, the Australian dollar stood at $0.7254

After falling 6.9% Wednesday, the Turkish Lira fell to 12.6 dollars.

It has seen a 40% decline in its value, despite rising more than 50% over the past week due to state-backed market interventions. On Wednesday, however Nureddin Nebati, Turkey’s Finance Minister said that current swings of the lira are not alarming and that they would be returning to their normal levels.

It fell again for the third consecutive session. The last time it was around $46,200. It had been trending lower after reaching an all-time high at $69,000 in November.