# Dollar firms in soft holiday trading, outlook bullish Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-12-29 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Dollar edges higher as stocks falter in holiday trading Meta Description: Follow the latest on the dollar's rise against major peers and the impact of COVID-19 on market trends in holiday-thinned trading. URL: https://financedigest.com/dollar-firms-in-soft-holiday-trading-outlook-bullishhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-12-29t014947z1lynxmpehbs01krtroptp4global-forex-1-1-1736836527170-compressed.jpg) By Alun John HONG KONG (Reuters) – The dollar inched up on Wednesday as a recent rally in shares showed signs of petering out, but holiday-thinned trading meant markets were showing little real direction. The dollar index, which measures the greenback against major peers rose as high as 96.240 during the session versus Monday’s close of 96.068, moving up against most other majors after the euro lost 0.14% on Tuesday. The common currency was last at $1.1305 and the [pound slipped](https://www.financedigest.com/ftse-100-slips-on-stronger-pound-pm-race-takes-focus.html "FTSE 100 slips on stronger pound; PM race takes focus") from a five-week high to $1.3433. But with many traders having taken time off for [Christmas or the end of the year](https://www.financedigest.com/scam-special-how-to-avoid-christmas-shopping-fraud-this-year.html "Scam Special: How to Avoid Christmas Shopping Fraud this Year"), analysts said it was hard to read too much into the moves. Things are mostly noise right now, though we are probably seeing a [soft risk-on/risk-off dynamic going on with stocks](https://www.financedigest.com/stocks-dollar-gain-on-soft-landing-hopes.html "Stocks, dollar gain on soft landing hopes") down slightly, and the dollar has caught a bid on the inverse of that,” said Kyle Rodda, an analyst at IG Markets. He said longer term, however, he was bullish on the greenback due to approaching [rate hikes](https://www.financedigest.com/dollar-firms-after-u-s-labor-data-suggests-more-rate-hikes.html "Dollar firms after U.S. labor data suggests more rate hikes") by the Federal Reserve and the apparent reduced chance of future lockdowns in the United States. The Fed is widely expected to begin hiking rates before several other major central banks such as the European Central Bank, and this has helped the [dollar index to have its best year in 2021 since](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") 2015. MSCI’s broadest index of Asian shares outside Japan lost 0.3% on Wednesday, and overnight the S&P 500 and the Nasdaq Composite both closed slightly lower, albeit after the S&P 500 posted gains for four straight days and [hit a record](https://www.financedigest.com/londons-ftse-100-hits-fresh-record-high-as-telecoms-surge.html "London’s FTSE 100 hits fresh record high as telecoms surge") intraday high earlier in the session. \[MKTS/GLOB\] Markets have been largely trading based on changing assessments of the impact of the Omicron variant of COVID-19, with the recent rally in risk assets like equities based on a view the new [strain would not derail the global economic](https://www.financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strains.html "UAE plans long-term economic ties with Israel despite political strains") recovery too much. U.S. health authorities on Monday shortened the recommended isolation time for Americans with asymptomatic [cases of COVID-19 to five days](https://www.financedigest.com/shanghai-finds-cases-after-five-days-of-zero-covid-but-end-of-lockdown-on-track.html "Shanghai finds cases after five days of ‘zero COVID’ but end of lockdown on track") from the previous guidance of 10. The yen, which had been [weakening alongside those advances in shares](https://www.financedigest.com/asia-shares-slip-dollar-strong-as-yuan-weakens.html "Asia shares slip, dollar strong as yuan weakens"), stemmed its losses on Wednesday. It was last at 114.82 per dollar compared with Tuesday’s month-low of 114.94. The [dollar was also supported by a rise](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low") in two-year Treasury yields which hit 0.758% on Tuesday, a near two-year high, before slipping marginally to 0.7461%. \[US/\] The Australian [dollar was steady](https://www.financedigest.com/shares-steady-dollar-gains-ahead-of-u-s-inflation-data.html "Shares steady, dollar gains ahead of U.S. inflation data") at $0.7232. Moves were more stark in cryptocurrencies, which often see sharp swings in [low liquidity periods](https://www.financedigest.com/volume-of-periodic-payment-orders-remains-low-according-to-aon-uk-motor-insurance-study.html "Volume of periodic payment orders remains low, according to Aon UK motor insurance study") such as weekends and holidays. [Bitcoin lost around 6% late on Tuesday to as low](https://www.financedigest.com/bitcoin-traders-can-now-trade-on-lows-and-highs.html "Bitcoin Traders Can Now Trade on Lows AND Highs!") as $47,300, giving up all of the steady gains it had made this week. Ether, the [world’s second-largest cryptocurrency](https://www.financedigest.com/the-emerging-world-of-cryptocurrency.html "The emerging world of cryptocurrency") which underpins the ethererum network, also lost around 6% to as low as $3,760, also a week low. (Reporting by Alun John; editing by Richard Pullin & Shri Navaratnam) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---