Dollar falls vs G4 currencies on selloff in US yields due to risk-off sentiment on Covid worries


The safe-haven Japanese yen and Swiss franc rallied across the board on Friday as news of a new Covid variant, which may potentially be resistant to the current vaccines triggered broad-based risk aversion. Intra-day decline in U.S. yields weakened usd vs euro and sterling.  
  
Reuters reported late Thursday Britain said it was concerned by a newly identified coronavirus variant spreading in South Africa that might make vaccines less effective and imperil efforts to fight the pandemic.    
The U.K. Health Security Agency said the variant, which is called B.1.1.529, has a spike protein that was dramatically different to the one in the original coronavirus that COVID-19 vaccines are based on.    "This is the most significant variant we have encountered to date and urgent research is underway to learn more about its transmissibility, severity and vaccine-susceptibility," UKHSA Chief Executive Jenny Harries said.     The variant was first identified at the start of this week, but Britain rushed to introduce travel restrictions on South Africa and five neighbouring countries, acting much more swiftly than with the currently dominant Delta variant.  
  
Versus the Japanese yen, dollar met renewed selling at 115.37 in Australia and dropped to 114.60 in Asian morning. The pair continued to ratchet lower and tumbled to 113.66 in European morning and despite a brief rebound to 114.20 at New York open, price fell to session lows at 113.66 in New York morning on active risk-averse jpy buying.  
  
The single currency traded with a firm undertone in Asia and jumped in early European morning to 1.1278 on cross-buying of euro especially vs sterling. The pair then ratcheted higher to an intra-day high at 1.1230 in New York due to usd's broad-based weakness.  
  
The British pound remained under pressure in Asia on overnight news of a new Covid variant and fell briefly but sharply to an 11-month trough at 1.3278 due partly to cross-selling of sterling. However, lack of follow-through selling triggered profit-taking and the pair rallied to session highs of 1.3367 near New York close.  
  
Data to be released this week :  
  
Japan retail sales, Australia business inventories, Italy producer prices, EU business climate, economic sentiment, industrial sentiment, services sentiment, consumer confidence, Germany CPI, Swiss current account, producer prices, US pending home sales and Dallas Fed manufacturing business index on Monday.  
  
Japan unemployment rate, industrial production, construction orders, New Zealand NBNZ business outlook, NBNZ own activity, Australia building permits, current account, net exports contribution, China NBS manufacturing PMI, Swiss KOF indicator, France consumer spending, GDP, CPI, producer prices, Italy GDP, CPI, Germany unemployment rate, EU HICP, Canada GDP, U.S. redbook, monthly home price, Chicago PMI and consumer confidence on Tuesday.  
  
Australia AIG manufacturing index, manufacturing PMI, GDP, New Zealand building permits, U.K. BRC shop price index, nationwide house price, Markit manufacturing PMI, Japan Jibun bank manufacturing PMI, China caixin manufacturing PMI, Germany retail sales, Markit manufacturing PMI, Swiss CPI, manufacturing PMI, France Markit manufacturing PMI, Italy Markit manufacturing PMI, EU Markit manufacturing PMI, U.S. MBA mortgage application, ADP employment change, Markit manufacturing PMI, construction spending, ISM manufacturing PMI, Canada building permits and Markit manufacturing PMI on Wednesday.  
  
Australia trade balance, imports, exports, Japan consumer confidence, Swiss retail sales, Italy unemployment rate, EU producer prices, unemployment rate, U.S. initial jobless claims and continuing jobless claims on Thursday.  
  
Australia AIG construction index, services PMI, Japan services PMI, China caixin services PMI, France budget balance, industrial output, Markit services PMI, Italy Markit services PMI, Germany Markit services PMI, EU Markit services PMI, retail sales, U.K. Markit services PMI, U.S. Non-farm payrolls, private payrolls, unemployment rate, average earnings, Markit services PMI, durables ex-defense, durable goods, factory orders, durables ex-transport, ISM non-manufacturing PMI, Canada employment change, unemployment rate and labor productivity rate on Friday.  

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