Delta virus spreads, dollar strengthens against safe-haven currency Reuters

Sano Hideyuki

TOKYO (Reuters)-The U.S. dollar was weak against the safe-haven Japanese Yen and Swiss franc on Tuesday, after weak US manufacturing data and increased concerns about the Coronavirus Delta variant, prompting traders to withdraw their bets on a strong economic recovery.

The U.S. dollar traded at 109.34 yen, close to the July 19 low of 109.07, which was the lowest level since the end of May. The U.S. dollar traded at 0.9054 francs against the Swiss franc, hitting a 1-1/2-month low of 0.9038 in the previous trading day.

The euro fell to 1.1873 US dollars against the US dollar and lost a bit of momentum after hitting a one-month high of 1.1909 US dollars on Friday, while the British pound fell from Friday’s one-month high of 1.39835 to 1.3889 US dollars.

Yukio Ishizuki, senior strategist at Daiwa Securities, said: “The market is in a moderate risk aversion, and bond yields have fallen slightly since European trading yesterday. As the Delta variant is spreading in many places, even in China, the market is somewhat cautious.”

A report from the Institute of Supply Management (ISM) showed that US yields fell on Monday shortly after the US manufacturing growth slowed for the second consecutive month in July.

“From a historical perspective, the 59.5 manufacturing ISM reading is still a very strong activity reading. Nonetheless, the reaction to the data released by the US Treasury market indicates that the market is concerned about the’growth peak’ and possible further slowdown in the future,” Luo Derrigo wrote that Catril is a senior foreign exchange strategist at National Australia Bank (OTC:) in Sydney.

The spread of Delta variants further clouded the foreground.

In the United States, the number of COVID hospitalizations in Louisiana and Florida has soared to the highest point of the pandemic, although the country’s top health expert Anthony Fauci ruled out the possibility of another lockdown in the country.

This surpasses any excitement about the $1 trillion infrastructure investment bill, which may be ready for a final vote as early as this week.

A variant of Delta, described by US authorities on Monday as as contagious as chickenpox and more contagious than the common cold or flu, is raging in many Asian countries that were once thought to have successfully controlled the disease.

Japan on Monday extended the state of emergency restrictions to more regions, as the number of cases in Tokyo hit a record high, while in China, the delta virus spread from coastal cities to inland cities, bringing new risks to the world’s second largest economy.

The Australian state of Queensland extended its COVID-19 lockdown on Brisbane on Monday, and soldiers began patrolling in Sydney to enforce home rules.

The Australian dollar was almost unchanged against the US dollar, at US$0.7367, as investors were concerned about the policy meeting of the Reserve Bank of Australia, which is expected to cancel the decision to cut the bond purchase plan.

After the Bank of New Zealand said on Tuesday that it would soon start consulting on ways to tighten mortgage lending standards, the New Zealand dollar rose 0.3% to $0.6989 because it wanted to control the swelling real estate market and protect home buyers.