NEW YORK: The US dollar strengthened on Tuesday after Federal Reserve Chair Jerome Powell said the risk of inflation had increased and suggested retiring the term “transitory” for inflation, while worries about the new Omicron coronavirus variant kept a bid in safe-haven currencies.
During a hearing with the US Senate Banking Committee, Powell also said higher prices are generally related to the pandemic.
The dollar index turned positive after the Powell comments and was last up 0.1% at 96.331.
Earlier, the Japanese yen and Swiss franc rose against the dollar, after Moderna’s CEO said the coronavirus vaccines will likely be less effective against the Omicron variant as they have been against other variants.
Adding to the fears, drugmaker Regeneron Pharmaceuticals Inc said on Tuesday its COVID-19 antibody treatment could be less effective against Omicron.
The warnings reinforced a view that the global economy could take longer to return to pre-pandemic levels than many had been expecting.
Against the US dollar, the euro was last down 0.1% at $1.1279 and the single currency earlier registered its biggest three-day rising streak since December 2020.
The Japanese yen was last up 0.2% at 113.31 per US dollar.
“Traders are in ‘sell first and ask questions later’ mode. You are seeing that global flight to safety,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
Prior to Omicron’s arrival, the main driver of currency moves was how traders perceived the different speeds at which global central banks would end pandemic-era stimulus and raise interest rates as they looked to combat rising inflation without choking off growth.
Cryptocurrencies also had a volatile trading session. Ethereum was last up about 4% at $4,638. Bitcoin was down 0.6% at $57,453.
Comments
Comments are closed.