Dollar Down, but Caps Losses as Newly Discovered COVID Strain Dampens Sentiment By Investing.com

Dollar Down, but Caps Losses as Newly Discovered COVID Strain Dampens Sentiment By Investing.com



© Reuters.

By Gina Lee

Investing.com – The dollar was down on Friday morning in Asia. But losses were minimized as growing concerns about a dampened investors’ risk appetite.

The that tracks the greenback against a basket of other currencies inched down 0.07% to 96.685 by 9:57 PM ET (2:57 AM GMT). The index moved further away from 96.938, its highest level in nearly 17 months hit on Wednesday. However, it was up 0.73% on the week and set for its fifth straight weekly gain.

The pair was down 0.58% to 114.68.

The pair fell 0.63% to 0.7145, even as Australian grew a better-than-expected 4.9% month-on-month in October. The pair was down 0.42% to 0.6830.

The pair inched up 0.09% to 6.3920 while the pair edged down 0.12% to 1.3304.

The rand fell to a more than one-year low, at 16.17 per dollar, with concerns mounting about the B.1.1.529 COVID-19 variant discovered in South Africa that could make vaccines less effective.

“COVID-19 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,” Barclays senior FX strategist Shinichiro Kadota told Reuters.

In Europe, a rising number of COVID-19 cases prompted Germany to consider following neighbor Austria’s lead and re-impose a lockdown.

Meanwhile, an increasingly hawkish tone from the U.S. Federal Reserve has increased bets of an interest rate hike by mid-2022, while counterparts in Europe and Japan stick to more dovish stances.

Bank of Japan governor Haruhiko Kuroda reiterated his commitment to massive monetary stimulus last week, while the , released on Thursday, signaled continued stimulus and a cautious approach to any policy changes.

“If the COVID-19 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 Barclay’s Kadota, who predicts dollar-yen will strengthen to 116 and beyond by mid-2022.

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 added.

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