Where are the Currencies headed? Regain or relapse?

Where are the Currencies headed? Regain or relapse?

After the initial shock of Omicron’s discovery sent investors fleeing for cover last week, Asian currency markets steadied on Monday. However, the analysts warned of increased volatility because of a lack of knowledge about the new coronavirus strain. The risky Australian dollar advanced 0.37 percent to $0.7139. It recovered from a 1% drop on Friday, when it fell to $0.71125 for the first time since August 20. The Mexican peso also recovered, rising 0.93 percent to 21.7280 per dollar after falling to its lowest level in over 14 months on Friday at 22.1540.

Outlook on the Currency market 

The safe-haven yen, which had benefited the most from the flight to quality, fell 0.09 percent to 113.60 per dollar. On Friday, the Japanese yen jumped as much as 2% to 113.05. The Swiss franc, a haven currency, fell 0.45% to 0.9257 per dollar. On Friday, the rand rebounded from a one-year low of 16.3675 per dollar, rising 0.93 percent to 16.1400.

Last week, South Africa found the Omicron variety, prompting governments worldwide to strengthen border restrictions due to alterations in the spike protein, which signal it may be resistant to current vaccines. Omicron has subsequently been found in Australia, the United Kingdom, Canada, Germany, and Hong Kong despite the quick response.

On a more positive note, a South African specialist who was the first to detect a new coronavirus strain noted that Omicron symptoms had been “quite modest” thus far. BioNTech said on Friday that it might find out in two weeks whether their collaborative vaccine with Pfizer (NYSE: PFE) needs tweaking.

President Joe Biden will deliver an update on the US response to the new variation later on Monday. The US dollar index measures the currency against six major rivals. After falling to a one-week bottom of 95.973 on Friday, it traded at 96.283. The dollar’s position as a haven may gain from the uncertainty. However, Omicron casts doubt on when the Federal Reserve – and other global central banks – will boost interest rates. On Friday, the euro fell 0.32 percent to $1.12785 after rising 0.98 percent as traders canceled their short bets. On Monday, many officials from the European Central Bank, including ECB President Christine Lagarde, will speak, despite the bank’s dovish position in the face of rising inflationary pressures.