Refugee yen falls to one-month low amid fears over Omicron option

The yen traded near a one-month low against the dollar on Tuesday, as safe havens in disfavour following stocks on Wall Street at record highs overnight, with Omicron uncertainty draining into the background.

The Japanese currency fell to 114,935 yen to the dollar for the first time since November 26, approaching the year-to-date low of 115,525 reached on November 24.

The S&P 500 index ended at a record high on Monday after strong US retail sales data eased fears over a highly contagious variant of the Omicron coronavirus, which led to the cancellation and delay of thousands of holiday flights and stranded cruise ships.

The US dollar, also seen as a safe haven, continued to weaken towards the lower end of its recent trading range against a basket of peers, even after a hawkish tilt by the Federal Reserve that caused policymakers to point to a three-quarter point interest rate. increases next year.

The dollar index, which measures the currency against six major peers, was little changed from the previous session at 96.076.

"Markets around the world are optimistic" that Omicron will not derail the economic recovery by reducing demand for the safe haven currency, primarily the yen, said Osamu Takashima, head of G10 currency strategy at Citigroup Global Markets Japan.

The rally in US stock markets "means that investors' risk appetite should be very, very strong at the moment", despite expectations of faster Fed policy tightening, he said.

He predicts that the yen is likely to test the 2021 low in the near future.

Sterling, which often rises when risk sentiment improves, held near a one-month high of $1.3445 reached the day before.

The Australian dollar, often considered an indicator of risk appetite, rose slowly to a three-week high of $0.6850 reached on Friday.

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The euro has consolidated near the upper end of its range against the dollar this month, virtually unchanged from Monday at $1.13255.


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