The investors scuttled for a cover on Monday as the currency market calmed in Asia after the initial shock of Omicron’s discovery last week. However, as little is known about the new coronavirus strain, analysts warn of more volatility in the market. The risk-sensitive Australian dollar rose to $0.7139 on Monday after tumbling to 1% on Friday for the first time since August 20. The Australian dollar rose from 0.37%.
The Mexican peso also recovered to 21.7280 per dollar, rising 0.93% after falling to 22.1540 per dollar on Friday, the weakest almost 14 months prior. The Japanese currency Yen recovered as much as 2%, closing at 113.60 per dollar after an initial slump of 0.09% to 113.05 on Friday. The Swiss franc, another strong currency, fell from 0.45% to 0.9257 per dollar. The South African rand jumped to 0.93% to 16.1400 per dollar after hitting 16.3675 Friday, a one-year low.
After discovering the Omicron variant last week, South Africa and other countries globally are quickly securing their border control as the mutation in spike protein could suggest that this strain is resistant to the current vaccines. Even though the Omicron threat was quickly responded to, it could not be stopped spreading in countries like Australia, Britain, Canada, Germany, and Hong Kong.
One of the South African doctors, the first to suspect the new coronavirus strain reassured that the symptoms of Omicron were very mild so far. On Friday, BioNTech said that within two weeks, it would know if the need for rework is needed on the vaccine developed by Pfizer.
A senior FX strategist at National Australia Bank, Rodrigo Catril, wrote in a client note that the volatility in the market would remain high until the post-pandemic conditions normalize. As a result, markets are forced to assess the outlook of global growth until more is known, he added further.
A strategist at Commonwealth Bank of Australia, Joseph Capurso, said that they expect the volatility in the currencies this week, and it would take even the slightest negative news concerning Omicron to push AUD below $0.7000.
The U.S. President Joe Biden is expected to update on Monday with regards to the U.S. response on Omicron. The U.S. dollar index, which measured against six major peer currencies, dipped to a week low of 95.973 on Friday recovered at 96.283
Due to the dollar’s status as a safe haven, it can book profit due to its uncertainty with Omicron on the horizon, and it clouds the outlook of rising interest rates in the Federal Reserve System and other global banks.
On Friday, the Euro dropped 0.32% to $1.12785 after jumping 0.98%. Speaking duties on Monday are assigned to several officials from the European Central Bank, including ECB president Christine Lagarde, who maintains a dovish stance. Sterling recovered from Friday’s 11-month low at $1.3278 to $1.33325. Bitcoin surged to around $57,400 in cryptocurrencies from $53,308.93 Sunday’s one-and-a-half-month low.