Haven currencies boosted by virus fears

Covid fears boost safe-haven currencies

With Covid-19 variant fears washing across financial markets today, haven currencies have outperformed at the expense of emerging and commodity/risk sentiment currencies. Trading was muted overnight due to a US holiday with the dollar index easing slightly by 0.08% to 96.71, driven mostly by gains in the yen.

EUR/USD and GBP/USD are holding steady at 1.1220 and 1.3300 this morning. Their technical picture remains bearish and neither of them is likely to receive any haven inflows. With Europe already capped by its 4th virus wave situation, both will remain sells on any sort of rally.

Elsewhere, USD/JPY has fallen by 0.55% to 114.70 as Japanese investors repatriate into yen in a defensive move. USD/JPY could fall to 114.00 in the next 24 hours. Likewise, the Swiss Franc is outperforming, USD/CHF falling 0.30% to 93.35. The Canadian, Australian and New Zealand dollars, bellwethers of commodity and risk sentiment, have unsurprisingly suffered today. USD/CAD has risen 0.53% to 1.2713, AUD/USD has fallen 0.65% to 0.7140 and NZD/USD is 0.60% lower at 0.6820. Both AUD and NZD are approaching their 2020 lows and a weekly close below 0.7100 or 0.6800 respectively, would be another bearish technical signal.

USD/ZAR and USD/MXN have risen by 1.0% today and Asian regional currencies are under some selling pressure as well. USD/IDR and USD/THB have risen by 0.40% with USD/KRW and USD/MYR rising by 0.30%. With a high beta to the global recovery, Asian FX will remain under pressure into the weekend thanks to the virus nerves sweeping markets, as with EM in general. USD/CNY is stubbornly clinging to 6.3900 today, providing some shield to regional currencies. China is unlikely to use today’s developments to weaken the yuan sharply, but it is another reason to reel back the one-way bullish bets on the yuan of the past few months.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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