The US dollar hovered near its highest level since July last year against major currencies on Monday after a Federal Reserve official said the first interest rate hike in the pandemic era could come as early as March.
According to Vietnam's Các Loại Tài Khoản Exness, the euro plunged with the British pound after the Netherlands went into lockdown on Sunday's health minister and Britain refused to rule out the possibility of further restrictions before Christmas amid the rapid spread of a variant of the Omicron coronavirus.
The dollar index, which measures the currency against six major peers, stood at 96.629, not far from the peak of 96.938 reached last month.
The World Health Organisation said on Saturday that the number of cases of Omicron infection doubles in 1.5-3 days in regions of the world with community transmission, but noted that much remains unknown about the variant, including the severity of the disease it causes.
On Friday, Fed chief Chris Waller said an interest rate hike was likely to be warranted "shortly after the bank completes its bond purchases in March".
"Waller gave a tailwind (to the dollar index) on Friday", which is now on the cusp of a new high, but "positioning in the US dollar is heavily skewed, so the prospect of a year-end leveling off is rising," Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a note to a client.
"While central bank action is the real issue, headlines about Omicron could be seen as a smoking gun to align positions."
The US dollar, which tends to attract demand as a safe haven, has peaked since December 15 against the euro, sterling and the risk-sensitive Australian dollar.
The dollar, although down against the other safe haven currency, the yen, is still roughly in the middle of its trading range for the past three weeks.
The yield on ten-year US Treasuries, to which the dollar-yen pair is often closely linked, fell around the two-week low reached on Friday.
Earlier on Friday, New York Fed President John Williams told CNBC that the Fed would get an "opportunity" to raise rates in 2022 by ending bond purchases by March.
Money markets estimate about a 50-50 chance of a quarter-point hike by March.
RIC buying prices as of 0109 GMT
Description RIC Last US closing interest rate,% Change since start of year, interest rate High rate Low rate.
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