Kevin Buckland

(Reuters) – The safe-haven yen hit a near seven-week high Thursday, while rands and other riskier currencies remained low as Omicron coronavirus emerged as the predominant strain in South Africa. It also continued its spread worldwide.

Initial indications suggest Omicron could be more contagious that previous versions. This has rattled financial markets, causing fears about a return of travel bans or lockdowns which may impede the global recovery.

It has been detected in Australia, Canada, Japan, and Britain. This is despite tightening their borders.

In comparison to Japan’s currency the U.S.dollar edged up 0.11% to 112.875yen but was still close to Tuesday’s lowest of 112.535. This level has not been seen since Oct. 11.

After a more-than 1% overnight surge, the South African rand was down 0.12% against the US dollar at 16.0025

From Tuesday to Wednesday, the number of South African cases – Omicron’s first discovery four weeks ago — doubled. According to the country’s National Institute for Communicable Diseases, 74% of all virus genomes that it sequenced in the past month were of this new variant.

On Wednesday, the first reported case was in America. It involved a Californian who had been fully vaccinated and returned to California from South Africa Nov. 22, where he tested positive seven days later.

Omicron created uncertainty, but Federal Reserve Chair Jerome Powell, Day 2, of testimony before Congress, reiterated Wednesday that he, along with other policymakers, will be considering a faster taper at the Dec. 14-15 meeting. This would allow them to consider earlier interest rate increases.

In a note Ray Attrill wrote to clients that Powell’s repetition testimony (Powell) shows him that he doesn’t feel the least bit unhappy with how markets interpret what he has said before.

We are now less than one week into the 2-week timeframe, which epidemiologists (not market analysts) believe is needed to make an informed judgment about the severity of the COVID-19 variant as well as the effectiveness of the existing vaccines.

The measured the currency against six peers edged 0.3% higher at 96.07 consolidating in its middle range of the past two week’s when it rose to 96.938 for first time since last July.

It was close to Tuesday’s lowest of $0.7063 and its weakest point since November last year.

The Sterling currency is frequently considered risky. It was unchanged at $1.3276. The currency plunged nearly one year to $1.31945, on Tuesday.

Following a dip to $1.1186 in the last month, the euro was steady at $1.1316.