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U.S. Dollar Index edges down 0.07%

Dollar Index

The index moved further away from 96.938, its highest level in nearly 17 months reached on Wednesday

The dollar was down on Friday morning in Asia. But losses were minimized as growing concerns about a newly discovered Covid-19 variant dampened investors’ risk appetite.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.07% to 96.685 by 2:57 AM GMT. The index moved further away from 96.938, its highest level in nearly 17 months reached on Wednesday. However, it was up 0.73% on the week and set for its fifth weekly gain in a row.

The USD/JPY pair was down 0.58% to 114.68. The AUD/USD pair dropped 0.63% to 0.7145, even as Australian retail sales grew a better-than-expected 4.9% month-on-month in October. The NZD/USD pair was 0.42% lower at 0.6830.

The USD/CNY pair inched up 0.09% to 6.3920 while the GBP/USD pair edged down 0.12% to 1.3304.

The South African rand dropped to a more than one-year low, at 16.17 per dollar, with concerns mounting about the new Covid-19 variant discovered in South Africa that could make vaccines less effective.

Covid-19 worries are definitely playing a role in increasing demand for safe havens including the yen, and because South Africa is the location of this new variant, that’s an obvious reason to avoid the rand, Barclays senior FX strategist Shinichiro Kadota told Reuters.

In Europe, a growing number of Covid-19 cases prompted Germany to consider following Austria’s lead and re-impose a lockdown.

Meanwhile, an increasingly hawkish tone from the U.S. Federal Reserve has increased bets of an interest rate hike by mid-2022, while counterparts in Europe and Japan stick to more dovish stances.

Bank of Japan governor Haruhiko Kuroda reiterated his commitment to massive monetary stimulus last week, while the minutes from the European Central Bank’s (ECB) October meeting, released on Thursday, signalled continued stimulus and a cautious approach to any policy changes.

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