NEW YORK- News of a coronavirus variant potentially resistant to current vaccines sent investors dashing for the safety of the Japanese yen and the Swiss franc on Friday, and traders also took profits after an extended rally in the US dollar.
The gains in the yen and the franc came at the expense of the growth-sensitive Australian dollar and Norwegian crown, though thinner volumes after Thursday’s US Thanksgiving holiday made market moves more volatile.
The United States will restrict travel from South Africa – where the new mutation was discovered – and neighboring countries beginning Monday, a senior Biden administration official said.
The World Health Organization (WHO) said it was designating the variant, named omicron, as being “of concern,” a label applied only to four variants to date. It could take weeks for scientists to fully understand the variant’s mutations and potential dangers.
“If we’re looking at something like this where we have new mutations on mutations of a spike protein it almost feels like the initial working assumption for most market participants is that this is a new phase of the pandemic,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
“New lockdowns and restrictions will maybe be put in place, and it certainly feels like we’re going to need a new vaccine as well,” he added.
One of the main gainers was the yen, which bounced off five-year lows hit this week against the greenback, and jumped almost 2 percent to a high of 113.09, its best day since March 2020.
