On Friday, the safe-haven Japanese yen alongside Swiss Franc, demands of which often heighten up during times of grievous socio-economic turbulences, had shelved modest gains with US Dollar Index (DXY) measured against a basket of six major currencies on an average plunged for a second straight session in a row, as news of identification of a new pandemic pathogen variant found in the Southern part of Africa, had rattled money market across the world while pulling investors off riskier assets.
Aside from that, as a pandemic insurgence in the US alongside re-imposition of travel restriction for eight Southern African countries, had poured cold water over prospects of a sharp uptick in economic activities on Q4, 2021, traders seemed uncertain on whether the US Fed would unwind its stance on an earlier-than-anticipated rate-hike, which eventually weighed on the US Dollar.
On top of that, in the day’s broad-based gains in safe-haven Japanese Yen alongside Swiss Franc, came against the expense of a heavy shelling on the greenback as beforementioned alongside the commodity sensitive Australian Dollar, as both US and UK crude futures’ prices faltered more than 12.0 per cent over last week in context of a plausible crude surplus during first quarter of 2022.
In tandem, as the United States, UK alongside a number of EU nations including Germany and France, had re-imposed travel restrictions on eight South African nations, making the continent’s most industrialized country a collateral to early detection, S.
African rand faltered over 2 per cent against its American peer.
Yen, Franc gain as new pandemic pathogen variant crush risk-appetite
Citing statistics, in the day’s FX market closure, the bloc’s single-currency euro, shared among 19-member states, gained 0.8 per cent to $1.1311 against the greenback, however, it tumbled to a roughly 6-1/2-year low against Swiss Franc to 1.044 franc per euro, while Japanese Yen gained over 1.0 per cent against its American counterpart to 113.6 yen per dollar.
British Pound wrapped up the day at $1.3333 after tumbling below $1.33 for the first time in 2021 earlier in the session, as traders scaled back a speculative bet over a rate hike as early as by December. Besides, with euro, yen and franc gaining across the board against the greenback, the US Dollar Index tumbled 0.6 per cent to 96.00, further swaying away from a 17-month peak of 96.93 hit on Wednesday.
Meanwhile, adding that the day’s FX market has been a copybook specimen of a flight-to-safety response, a strategist at Societe Generale in London, Kenneth Broux said, “This is a textbook flight to quality into yen and the Swiss franc on the new virus strain with the thin liquidity also a factor which may accelerate the unwinding of short bond positions”.