Investors breathed a sigh of relief after news emerged that the Omicron variant is not as dangerous as first feared.
The US Dollar climbed to 113.89 against the Japanese Yen after Monday's two week low of 112.97. The Dollar Index, which measures the USD against six major rivals, traded on Monday at 96.148, up from a low of 95.973 on Friday.
US President Biden has said he would not reinstate lockdowns due to Omicron, leading to collective relief. Although many countries have tightened border controls, hope is spreading that this mild variant will not disrupt trading.
The Australian dollar showed gains from Monday's three-month low of $0.7109. The Sterling was little changed at $1.3324, while the Euro was stable at $1.1297.
What does this mean for me?
A week is a long time in the global markets. As recently as last week, before the Omicron news broke, currency volatility was driven by how analysts thought global central banks would raise interest rates to combat rising inflation.
Fast forward a week and the Omicron variant is dominating currency moves. If you did not know it already, this shows how much the world’s markets are driven by sentiment and confidence.
As a trader, you first need to have your ear to the ground, to know what is happening in the world around you; and second, it helps to be able to understand how these changes affect your portfolio.