Aussie and kiwi slip, yen rises on Moderna CEO’s Omicron warning

Illustrative photo of US Dollar, Swiss Franc, British Pound and Euro banknotes, taken in Warsaw on January 26, 2011. REUTERS / Kacper Pempel / File Photo

Nov. 30 (Reuters) – Risk-sensitive currencies slipped and safe-haven stocks gained Asian Tuesday afternoon, reversing direction after Moderna’s CEO said COVID-19 vaccines likely wouldn’t be as effective against Omicron variant than with other types.

“There aren’t many people, I think, where (efficiency) is on the same level… as we had with Delta,” Moderna CEO Stéphane Bancel told the Financial Times in an interview.

The Australian dollar slipped 0.65% to a new 12-month low of $ 0.7093, and the New Zealand dollar lost 0.6% to $ 0.6783 after the interview was released, se heading into its worst month since May 2015.

The yen gained 0.3%, with the dollar hitting just 112.97 yen, tying its two-week low reached on Monday.

Previously, the Japanese currency had lost ground and the antipodes currencies had gained, traders are reassured by the first indications that Omicron may be softer than expected as well as remarks by President Joe Biden that the United States will not restore blockages. Read more

But the World Health Organization has warned of a “very high” risk of outbreaks of Omicron infection, and countries around the world have responded quickly to tighten border controls. Read more

The euro was stable at $ 1.131 while the pound was little changed at $ 1.3315

The single currency fell to a nearly 17-month low at $ 1.11864 last week as policymakers at the European Central Bank stuck to their dovish stance in the face of soaring inflation.

The latest Eurozone consumer price reading is expected later Tuesday.

Prior to Omicron’s arrival, the main driver of currency movements was how traders perceived the different speeds at which global central banks would end pandemic-era stimulus measures and raise interest rates as ‘they sought to fight rising inflation without stifling growth.

In testimony prepared for Congress later Tuesday, Fed Chairman Jerome Powell said Omicron could prolong inflationary pressures. Read more

This would potentially accelerate the need for rate hikes, as traders initially reacted to Omicron’s discovery by pushing back bets on Fed tightening due to the risk to growth.

Money markets currently see a good chance of a first rate hike in July, but one is not fully assessed until September.

The Fed’s impending rate hikes had previously supported the dollar.

“The dollar weakness we saw on Friday shows that much of the dollar’s strength was more a function of Fed thinking and Fed pricing. Another day you would expect the benchmarks of safe haven value of the US dollar are significant, ”said Ray Atrill. Head of FX Strategy at NAB.

The dollar index, which measures the currency against six major rivals, last traded at 96.075, back near Friday’s low of 95.973, when it suffered its largest decline on a day since May.

Reporting by Kevin Buckland Alun John and Tom Westbrook; Editing by Lincoln Feast & Shri Navaratnam

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