The safe-haven yen held steady on Wednesday, while the risk-sensitive Australian dollar languished near a one-year low after Federal Reserve Chair Jerome Powell signaled a faster taper of stimulus despite the risks around the Omicron COVID-19 variant.
Investors fear that hasty monetary tightening could choke off the nascent economic recovery, with little still known about Omicron’s potential to evade current vaccine protection or how deadly it might be.
“Investors are staying cautious,” said Shusuke Yamada, chief Japan FX strategist at Bank of America-Merrill Lynch.
“It’s very difficult to make a judgement about the impact of Omicron when we don’t have a lot of information.”
Global markets fell sharply on Tuesday after the head of drugmakerModerna said existing COVID-19 vaccines would be less effective against the new variant, although BioNTech’s chief executive struck a cautiously positive note, saying the vaccine it makes with Pfizer would likely offer strong protection against severe disease from Omicron.
The Aussie weakened 0.12 percent to $0.71245 after dipping as low as $0.7063 of Tuesday for the first time since Nov. 3, 2020. The New Zealand dollar was largely flat at $0.68195 after also touching the lowest since early November of last year at $0.6773 in the previous session.
The greenback ticked 0.09 percent higher to 113.26 yen, but still within sight of an overnight low of 112.535, a level not seen since Oct. 11. – Reuters
