Yen rebound resumes, Aussie gains, as currency markets weigh risk from Covid wave
The safe-haven Japanese yen and Swiss franc strengthened on Friday, as the threat of a new COVID-19 wave in the United States and Europe chilled the increased risk appetite that had been driven by promising vaccine news earlier this week.
At 104.72 yen, the dollar had lost 0.32% against the Japanese currency on Friday morning in New York. The yen dropped around 2% versus the dollar on Monday. The Swiss franc firmed to 0.9132 against the dollar, after trading at 0.9192 mid-week.
The dollar slipped 0.18% against a basket of currencies.
The news saw the dollar rise as traders quit their long-yen positions. But currency market traders became more risk-averse on Thursday and Friday as infections spread and the heads of the Federal Reserve and the European Central Bank (ECB) stressed that the economic outlook remains uncertain.
Despite the pullback, the yen was still on track for its worst week since September.
The euro was up 0.17% at $1.1824.
The prospect of a vaccine is a source of relief but the euro zone will still suffer as a result of new lockdown measures, two ECB policymakers also said.
But the Australian dollar - a liquid proxy for risk and global economic growth- picked up. It was up 0.26% on the day at 0.7251 versus the dollar.
U.S. dollar strength could see the Euro retest lows before the end of this year: Analyst
Gareth Berry of Macquarie Group thinks the EUR/USD cross could revisit lows as escalating coronavirus levels in the western hemisphere prompt a “minor rally” in the U.S. dollar.
Reference: CNBC
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