Article content
OTTAWA — The safe-haven yen rallied while
the South African rand and risk-sensitive Australian dollar
slumped on Friday, as investors ducked for cover following the
discovery of a new coronavirus variant that could resist current
vaccines.
The yen leapt as much as 0.64% to 114.595 per
dollar, and fellow haven the Swiss franc rose as much
as 0.33% to 0.9330 per dollar after South African scientists
discovered the B.1.1.529 variant spreading in the country. The
variant has a cluster of mutations that may help it evade the
Advertisement
This advertisement has not loaded yet, but your article continues below.
Article content
body’s immune response and make it more transmissible. It has
since been found in Botswana and in Hong Kong.
The rand dropped 1.62% to a more than one-year
trough at 16.24 per dollar, while the Aussie and New
Zealand dollars slumped to three-month lows at $0.7135
and $0.6818, respectively.
“COVID worries are definitely playing a role in increasing
demand for safe havens including the yen, and because South
Africa is the location of this new variant, that’s an obvious
reason to avoid the rand,” said Shinichiro Kadota, senior FX
strategist at Barclays in Tokyo.
Britain has rushed to introduce travel restrictions on South
Africa and neighboring Botswana, Namibia, Zimbabwe, Lesotho and
Eswatini. Sterling slipped to a new 11-month low of
Advertisement
This advertisement has not loaded yet, but your article continues below.
Article content
$1.3299.
However, the euro rose 0.15% to $1.1222,
recovering after hitting its lowest in nearly 17 months earlier
in the week at $1.1186. Germany is considering following
Austria’s lead and reimposing a COVID-19 lockdown with the
continent once again the epicenter of the pandemic.
Gains for the yen, franc and euro pushed the dollar index
– which measures the greenback against those and three
other currencies – further away from Wednesday’s 96.938, its
highest in nearly 17 months. It last traded at 96.707
But the index remained up 0.72% on the week, still headed
for its fifth straight weekly advance.
Traders have ramped up bets that an increasingly hawkish
Federal Reserve will lift rates by the middle of next year,
Advertisement
This advertisement has not loaded yet, but your article continues below.
Article content
while central banks in Europe, Japan and elsewhere stick to more
dovish stances.
“If the COVID situation worsens, then dollar-yen could go
down further, but otherwise the monetary policy divergence is
definitely going to be weighing on the yen in the medium term,”
said Kadota, who predicts dollar-yen will strengthen to 116 and
beyond by the middle of next year.
On the flip side, 114 should provide a floor for the
currency pair in the near term, “unless the world really changes
for the worse,” he said.
Last week, Bank of Japan governor Haruhiko Kuroda reiterated
his commitment to massive monetary stimulus, adding that the
central bank stands ready to ramp it up further if necessary.
Overnight, minutes from the European Central Bank’s October
Advertisement
This advertisement has not loaded yet, but your article continues below.
Article content
meeting showed most policymakers leaning toward continued
stimulus and a cautious approach to any policy changes, despite
the pressure from heated inflation.
By contrast, money markets are pricing for a Fed rate hike
by July, with good odds it could come in June.
A potentially crucial signpost for U.S. policy direction is
due next Friday, with the release of monthly payrolls figures.
“Medium term, we continue to favor the USD,” Jane Foley,
senior FX strategist at Rabobank, wrote in a research note.
“However, with the market now long USD and short EUR and the
money market very aggressively positioned for Fed rate hikes
next year, there is scope for pullbacks in the currency pair,”
with $1.15 a potential target, and the payrolls report a
Advertisement
This advertisement has not loaded yet, but your article continues below.
Article content
potential trigger, she said.
========================================================
Currency bid prices at 0451 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar $1.1222 $1.1206 +0.15% -8.15% +1.1227 +1.1206
Dollar/Yen 114.7150 115.3700 -0.62% +11.01% +115.3150 +114.6050
Euro/Yen
Dollar/Swiss 0.9328 0.9356 -0.28% +5.46% +0.9359 +0.9330
Sterling/Dollar 1.3305 1.3318 -0.08% -2.60% +1.3322 +1.3299
Dollar/Canadian 1.2712 1.2646 +0.55% -0.15% +1.2714 +1.2650
Aussie/Dollar 0.7141 0.7186 -0.61% -7.16% +0.7190 +0.7135
NZ 0.6825 0.6854 -0.36% -4.91% +0.6856 +0.6818
Dollar/Dollar
All spots
Tokyo spots
Europe spots
Volatilities
Tokyo Forex market info from BOJ
(Editing by Ana Nicolaci da Costa and Jacqueline Wong)
Advertisement
This advertisement has not loaded yet, but your article continues below.
Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.