SYDNEY- The dollar was supported against safe-haven currencies such as the Japanese yen on Tuesday, hanging on to an overnight jump made with US yields as investors hoped early signs the Omicron variant may be mild will be proved correct.
Riskier currencies have also found buyers and the Australian dollar firmed into a central bank meeting that will determine whether or not the Reserve Bank of Australia (RBA) follows the Federal Reserve with talk of early tapering.
The Aussie had its best day in seven weeks on Monday, rising 0.7 percent, and hovered around $0.7040 on Tuesday ahead of the RBA at 0330 GMT. The RBA already abandoned its yield target last month, so any further shift in policy or tone will surprise traders.
The yen nursed a 0.6 percent overnight drop, its largest in two weeks, at 113.47 per dollar.
The Swiss franc, another safe-haven currency, suffered its largest one-day percentage fall in nearly three months on Monday. Dropping through its 200-day and 50-day averages to 0.9255 per dollar.
“Although there is still a lot of uncertainty over Omicron’s health and economic impact, investors have embraced news from South Africa suggesting the exponential rise in Omicron infections has not been followed by a big wave in hospitalizations,” said NAB strategist Rodrigo Catril.
Early observations in South Africa suggest those infected suffer relatively minor symptoms compared with previous virus waves. Anthony Fauci, the top US infectious disease official, also said it doesn’t seem too severe.
