Currencies recover from Omicron chaos but analysts warn more volatility ahead

  • In Business
  • 2021-11-29 00:16:38Z
  • By Reuters

By Kevin Buckland

OTTAWA (Reuters) - Currency markets calmed on Monday in Asia after the initial shock of the discovery of the Omicron coronavirus variant sent investors scurrying for cover last week, but analysts warned of more volatility with little still known about the new strain.

The risk-sensitive Australian dollar rose 0.37% to $0.7139, recovering after a 1% tumble on Friday that saw it dip to $0.71125 for the first time since Aug. 20.

The Canadian dollar also rebounded, with the greenback sliding 0.57% to C$1.2726, off the previous session's two-month high at C$1.2800.

The safe-haven yen, which had been the biggest beneficiary of the flight to quality, slipped 0.25% to 113.75 per dollar. The Japanese currency surged as much as 2% at one point on Friday to 113.05.

The South African rand recovered from Friday's one-year low at 16.3675 per dollar, jumping 0.93% to 16.1400.

South Africa discovered the Omicron variant last week, and countries globally have been quick to tighten border controls with mutations in the spike protein suggesting it could be resistant to current vaccines.

Despite the speed of the response, Omicron has since been detected in places including Australia, Britain, Canada, Germany and Hong Kong.

BioNTech said Friday it may know within two weeks if the vaccine it developed with Pfizer needs to be reworked.

"Until then, market volatility is likely to remain elevated," Rodrigo Catril, a senior FX strategist at National Australia Bank, wrote in a client note. "Markets have been forced to reassess the global growth outlook until we know more."

"We expect currencies to be volatile this week," echoed Joseph Capurso, a strategist at Commonwealth Bank of Australia. "It will not take much negative news about Omicron to push AUD below $0.7000."

President Joe Biden will give an update later on Monday of the U.S. response to the new variant.

The U.S. dollar index - which measures the currency against six major peers - traded at 96.204, after dipping to a one-week low of 95.973 on Friday.

While the dollar stands to benefit from the uncertainty because of its status as a safe haven, it clouds the outlook for when the Federal Reserve - and other global central banks - can raise interest rates.

The euro, which jumped 0.98% on Friday as traders closed out short positions, slipped 0.23% to $1.1290.

Sterling was about flat at $1.3335, off Friday's 11-month low at $1.3278.

(Reporting by Kevin Buckland; Editing by Lincoln Feast.)


More Related News

Omicron's new variant cousin, BA.2, has arrived in the US. But don't panic yet, experts say.

Cases of omicron BA.2 have been reported in at least four states - California, New Mexico, Texas and Washington - and on three other continents.

We've turned the corner on omicron and GOP primary for governor could get nasty

Welcome to the Milwaukee Journal Sentinel's daily news briefing

Protests, citizenship festivities to mark contentious Australia Day holiday
Protests, citizenship festivities to mark contentious Australia Day holiday
  • US
  • 2022-01-26 01:19:06Z

MELBOURNE (Reuters) -Thousands rallied against the mistreatment of Indigenous people across Australia on Wednesday as citizenship ceremonies took place to...

DeSantis blasts FDA for halting drugs ineffective on omicron
DeSantis blasts FDA for halting drugs ineffective on omicron

Florida Gov. Ron DeSantis vowed Tuesday to fight a decision from federal health regulators to block two coronavirus antibody treatments after the drugs were ...

Pfizer opens study of COVID shots updated to match omicron
Pfizer opens study of COVID shots updated to match omicron

Pfizer has begun a study comparing its original COVID-19 vaccine with doses specially tweaked to match the hugely contagious omicron variant. Pfizer and its...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Business