Dollar Climbs amid Dull Holiday Trades, Expected to Yield Bullish Prospects

The dollar swelled on Wednesday in a market affected by slowed holiday trades as shares remain robust.

The dollar index rose by 96.240 while the euro plummeted by 0.14% on Tuesday. The pound dipped to $1.3433 following a five-week high, while the currency is at $1.1305. However, market experts remain skeptical about the latest developments, attributing the same to the recent holiday-informed tedium in trades.

Kyle Rodda, an IG Markets analyst said, "Things are mostly noise right now, though we are probably seeing a soft risk-on/risk-off dynamic going on with stocks down slightly, and the dollar has caught a bid on the inverse of that." However, Rodda contended that he remains optimistic about the dollar’s future performance in view of the upcoming Fed-approved interest rate hikes which will be implemented in 2022.

The U.S. Federal Reserve has recently announced its plans to raise the borrowing rates to combat pandemic-induced inflation with as many as three hikes expected to come into effect in 2022.

The world market of late has been functioning based on the potential impact of the Omicron on the global economic recovery. However, recent studies have supported the findings that the Omicron variant is comparatively milder, and will therefore not hinder the collective efforts to offset COVID-related adverse financial consequences in the global commercial sphere.