Dollar languishes near one-week low against major peers

Dollar languishes near one-week low against major peers

TOKYO, Dec 23 Reuters -- The safe-haven dollar languished near an almost one week low against its major peers on Thursday as investors took a more optimistic view on the global outlook despite the rapid spread of Omicron coronaviruses variant.

The dollar index, which measures the currency against six rivals, fell 0.08% to 96.032 and earlier reached 96.018 for the first time since Dec. 17.

The risk-sensitive Australian dollar was steady at $0.72165 after Wednesday's 0.86% surge.

After a 0.63% rally, the pound was little changed at $1.3352.

Risk appetite has improved since Monday when markets were rattled by government restrictions relating to the spread of Omicron.

The U.S. consumer confidence improved more than expected in December, suggesting that the economy would expand in 2022 despite a resurgence in COVID-19 infections and reduced stimulus spending.

There was also encouraging news from a South African study, which showed reduced risks of hospitalisation and severe disease in people infected with Omicron compared to the Delta strain.

The euro went up 0.12% to $1.13395, adding to a 0.33% overnight advance.

The dollar was not changed at 114.17 yen, another safe-haven currency, holding close to an almost one-month high from Wednesday at 114.37.

After a hawkish tilt at the Federal Reserve this month, analysts expect the dollar to strengthen in the coming months, setting the U.S. central bank apart from more dovish peers in Europe, Japan, Australia and elsewhere.

Money markets price better than 50 -- 50 odds for an increase by the March policy meeting.

With recent Fed speak indicating that March is live, we continue to think risk reward favors respecting that outcome and hence supporting USD firmness in the new year, TD Securities strategists wrote in a report.

Ongoing data strength should help bolster Fed pricing, especially given reports that Omicron seems to be leading to fewer hospitalisations, they said.

They said that the dollar is likely to consolidate within a $1.12 to $1.14 range against the euro in the near term.