Amidst talk of interest rate hikes by central bankers and concerns about the spread of Omicron Covid-19 variant, traders retreated from riskier currencies, lifting the dollar on Friday.
Following a series of central bank policy statements, the dollar index gained 0.7% against major global currencies, recouping all of the value lost on Thursday.
Following two days of gains, the euro and pound fell 0.8% and 0.6%, respectively.
On concerns that the Omicron variant will dampen demand, commodity-linked currencies, such as the Australian and Canadian dollars, fell in value as well.
Friday’s oil prices ended the week, with Brent down 2.6% and WTI down 1.3% though trading above $70 a barrel primarily due to concerns over the potential impact of new fuel restrictions due to an outbreak of the Omicron Coronavirus.
The market is under pressure from COVID concerns that won’t go away.
By market cap, Apple Inc. and Microsoft Corp. were the two worst performers among U.S. tech giants. Apple dropped 4.6% this week, its worst weekly decline since February. Microsoft’s stock fell 5.5% this week, the largest weekly decline since October 2020. Google’s parent company, Alphabet fell 4.2%.
Concern over the Fed’s inflation-fighting shift and economic growth are highlighted by the volatility of the world’s biggest technology stocks. In the event that interest rates spike, stocks with higher valuations could be under pressure, especially if profit growth is slowing.
Crypto market valuation dropped to $2.1 trillion as Bitcoin lost 3% and was trading slightly above $46,000. Most altcoins also reported losses as the market valuation fell to $2.1 trillion.
According to a new study from England, reinfection risks with the Omicron variant are five times higher than with the Delta variant. Several European countries are weighing increased travel and social restrictions as a result of the findings.
A rate increase will likely be warranted “shortly after” the Federal Reserve ends its bond purchases in March, according to Federal Reserve Governor, Chris Waller.
In the face of persistently high inflation and the Omicron threat, traders are comparing the interest rates of different currencies and central banks adjust their monetary policies at different speeds.