Dollar has crashed massively in major markets as Omicron Covid Variant takes centre stage.
Newsonline reports that on Friday morning in London, the dollar was slightly down amid profit-taking while the yen, another safe-haven asset, remained close to a seven-week high.
Concerns over the new Omicron COVID-19 variant and its rapid spread worldwide also affected the South African rand and other riskier currencies.
By the early hours of Thursday, the U.S. Dollar Index, which tracks the greenback against a basket of other currencies, fell 0.06% to 95.96 index points
During midweek, DXY’s bullish attempt met resistance in the 96.10/15 band. If the dollar is unable to recover upside momentum on a sustained basis in the near term, another bout of weakness may follow, leading to another visit to recent lows around 95.50.
In July 2020, the index rose as high as 96.938 for the first time since then, before settling in the middle of its range. A level not seen since Oct. 11, price remains close to Tuesday’s low of 112.535 against the yen. In the previous session, it had gained more than 1% against the South African rand.
It was first detected in Botswana and South Africa, but scientists and public health officials are concerned about a growing number of mutations that may lead to the virus being more transmissible and resistant to existing vaccines.
Omicron was described as a “variant of concern” by WHO officials on Monday, despite the fact that there are many uncertainties surrounding the virus. So far, there have been cases in 20 countries, including the United Kingdom, Italy, Belgium, and the Netherlands. Omicron was detected in a traveller who returned from South Africa to California on Wednesday.
As a result of news that Omicron may be more contagious than previous variants, the markets reacted negatively, indicating a return to travel bans and lockdowns, which could hinder economic recovery.
Despite tightened borders, Australia, the U.K., Canada, and Japan also reported cases of the variant on Wednesday. In South Africa, where Omicron was discovered four weeks ago, the number of cases more than doubled from Tuesday to Wednesday.
U.S. Federal Reserve Chairman Jerome Powell said during the Fed’s meeting from Dec. 14 to 15 that the central bank would consider speeding up asset tapering regardless of Omicron and its impact.
The result may also be a faster-than-expected increase in interest rates further limiting the greenback’s downsides.