Peter Nurse

Investing.com. The dollar edged higher Thursday in European trading, but it remained at the bottom of the recent range for holiday-thinned volumes. This was as a result of fears about the OmicronCovid-19 variant.

At 1.45 am ET (0645 GMT), Dollar Index traded 0.2% higher at 96.1. This is due to an increase in U.S. Treasury yields. The benchmark 10-year yields reached 1.56% Wednesday. It was the highest rate since November.

The index rose 0.2%, to 115.16. This is a new one-month record. It’s not far from November’s 115.51 high. However, it fell 0.3%, to 1.1317. Still close to its one-month peak, the risk-sensitive edged up to 0.7249.

“Although Omicron cases in the US and Europe, amongst others, continue to surge, it has yet to make its presence felt negatively in economic data. With market activity much reduced for the holiday season, investors continue to price in a global recovery, hitting a minor bump, not a pothole,” said Jeffrey Halley, an analyst at Oanda. 

“Europe’s restrictions will have a tail impact, but, for now, markets are overwhelmingly pricing in the latest variant as a milder incarnation, despite its easier contractibility.”

Investors will be focusing on Thursday’s release of Weekly later Thursday to see if there is further proof that the U.S. economy continues to recover despite increasing numbers of Covid cases.

In the week that ended December 18, initial unemployment claims totaled 205,000, unchanged from the previous period. Labor Department data last week showed that this level is broadly consistent with pre-pandemic levels.

It is anticipated that the claims figure will remain relatively unchanged at 8:30 AM ET (1330 GMT). This illustrates how low job losses have been in recent months. Employers are focusing on keeping workers happy and trying to attract new talent to match consumer demand.  

Elsewhere,  rose 5.8% to 13.3723, with the lira giving back some of last week’s hefty gains after President Recep Tayyip Erdogan announced a scheme to protect lira deposits against currency volatility.

The Turkish Lira has previously dropped to records due to the central bank cutting its policy rate by 500bps since September, even though inflation rose above 20%.