Kevin Buckland

TOKYO, Reuters – On Friday the safe-haven yen rose and the South African rand fell as traders became cautious following concerns raised by Britain about a coronavirus variant that is spreading to the African country.

While the yen jumped as high as 0.56%, to 114.68 USD, the rand fell to an over-one year low at 16.17 US Dollar as concerns flared about B.1.1.529, which could make vaccines less efficient.

The risk-sensitive Australian dollar slid as much as 0.33% to a three-month low of $0.71265, ignoring a much-better-than-expected climb in retail sales.

Shinichiro Kadota (senior FX strategist) stated, “COVID fears are definitely playing an important role in increasing demand to safe havens such as the yen and because South Africa’s location is this new variant of the yen that’s an obvious reason why we should avoid the rand.” Barclays Tokyo, (LON:).

British pounds fell to $1.3305 for an eleven-month lowest.

After falling to $1.1186 in the past week, the euro gained 0.12% to $1.12185. Germany might follow Austria’s example and put a COVID-19 blockade on Europe, making it once more the center of the pandemic.

The, which compares the greenback to six peers including the yen euro and pound sterling, edged closer from Wednesday’s 96.338 – the highest point in 17 months. The last time it traded was at 96.715.

However, the weekly increase was 0.73%, and it is still on track for its fifth consecutive week of gains.

Traders are betting that an ever more hawkish Federal Reserve will raise rates before the middle next year. Central banks elsewhere in Europe, Japan, and other countries remain more conservative.

Kadota said that if the COVID situation gets worse, the dollar-yen may fall further. However, otherwise, the monetary policy divergence will definitely be weighing down the yen over the medium-term. He predicts that the dollar-yen would strengthen to 116 or higher by the middle next year.

He said that 114 would provide a ceiling for the currency pair for the short term. “Unless the world changes really for the worse,”

Haruhikokuroda, Bank of Japan governor, reiterated his belief in massive monetary stimuli and stated that the central banking is available to boost it further, if required.

Minutes from the October European Central Bank meeting revealed that most policymakers were leaning towards continued stimulation and a prudent approach to any future policy changes, in spite of the heat inflation.

The money market, on the other hand, is pricing for a Fed Rate Increase by July. However, there are good chances it will come in June.

The release of the monthly payrolls numbers next Friday is a potentially important indicator for U.S. policy direction.

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Prices for currency bids at 0140 GMT

Description: RIC U.S. Last Close Pct. Change YTD High Bid Low

Changes in the past

Session

Euro/Dollar

$1.1218 $1.1206 +0.11% -8.18% +1.1225 +1.1206

Dollar/Yen

114.9400 115.3700 -0.39% +11.26% +115.3150 +114.7050

Euro/Yen

128.93 129.29 -0.28% +1.58% +129.3300 +128.6300

Dollar/Swiss

0.9344 0.9356 -0.13% +5.62% +0.9359 +0.9334

Sterling/Dollar

1.3305 1.3318 -0.10% -2.61% +1.3322 +1.3305

Dollar/Canadian

1.2681 1.2646 +0.25% -0.44% +1.2682 +1.2650

Aussie/Dollar

0.7158 0.7186 -0.38% -6.95% +0.7190 +0.7158

NZ

Dollar/Dollar 0.6828 0.6854 -0.34% -4.89% +0.6856 +0.6830

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