- Dollar off 0.3% at 112.775 yen
- Sterling and Aussie rebound
- Swiss franc gains on dollar
(New throughout, updates prices, market activity; new byline, changes dateline, previous LONDON)
The U.S. dollar fell on Wednesday morning in trading that saw the safe-haven yen and Swiss franc appreciate even as the risk-on British and Australian currencies rebounded from lows the day before.
The moves underlined the fragility of the calm that seemed to have settled over the foreign exchange markets earlier in the day.
Traders are weighing what the new Omicron variant of the coronavirus might do to plans that Federal Reserve Chair Jerome Powell signaled on Tuesday to move more quickly to raise U.S. interest rates.
The dollar index =USD , which measures the greenback against major currencies was down 0.3% on the day at 95.682 at 10:07 ET (1507 GMT), losing a similar amount to the Japanese yen JPY= and falling 0.1% against the Swiss franc CHF= .
The British pound GBP= , often considered a risk-on currency, was up nearly 0.4% at $1.3344. The pound on Tuesday had been knocked to its lowest level in nearly a year by fears over vaccine effectiveness against the Omicron variant GBP=D3 .
"We've gotten these conflicting claims about the new variant, and Powell's comments really threw the markets for a loop," said Marc Chandler, chief market strategist at Bannockburn Global Forex.
"People are still pretty nervous," Chandler said. Powell said on Tuesday that the risk of inflation had increased and he signaled the central bank may accelerate its bond-buying taper at its meeting later this month.
The dollar showed little initial reaction on Wednesday morning to the ADP report on U.S. private payrolls. It showed an increase of 534,000 jobs last month, slightly higher than the 525,000 jobs that economists polled by Reuters had forecast.
"It means another solid jobs report" on Friday when the U.S. government posts more comprehensive payroll numbers, Chandler said. "Friday's U.S. jobs data is the next big thing."
The greenback is up 6% this year. November was its strongest month since June.
The euro EUR=EBS was up 0.2% on the day at $1.1356 at 10:07 a.m. ET (1507 GMT).
Euro-dollar volatility gauges reached their highest levels of the year on Monday amid the conflicting virus and interest rate signals. The Omicron variant could slow Fed tightening and thus be good for the euro, ING strategists wrote in a client note.
"Both themes will be fed many fresh inputs over the next four weeks and thinning liquidity conditions point to bumpy conditions in FX markets," ING said.
Prior to the tailspin caused by Omicron's advent, the main driver of exchange rates had been expectations of the different speeds at which central banks will raise interest rates.
The Australian and New Zealand dollars also made gains, lifting them from one-year lows. The Aussie AUD=D3 was up 0.5% at $0.7168 and the kiwi was up 0.6% at $0.6866 NZD=D3 .
The Chinese yuan CNY=CFXS , a beacon of resilience in a turbulent few days, touched a six-month high of 6.3596 per dollar after better-than-expected November manufacturing data.
In cryptocurrencies, bitcoin was up about 2% at $57,885 BTC=BTSP at 9:04 ET (1404 GMT).
======================================================== Currency bid prices at 10:07AM (1507 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 95.6820 95.9710 -0.29% 6.336% +96.1380 +95.6710 Euro/Dollar EUR=EBS $1.1356 $1.1336 +0.17% -7.06% +$1.1360 +$1.1303 Dollar/Yen JPY=EBS 112.7750 113.1450 -0.31% +9.16% +113.6200 +112.7500 Euro/Yen EURJPY= 128.07 128.30 -0.18% +0.91% +128.7800 +128.0500 Dollar/Swiss CHF=EBS 0.9171 0.9184 -0.14% +3.66% +0.9217 +0.9170 Sterling/Dollar GBP=D3 $1.3344 $1.3298 +0.36% -2.32% +$1.3352 +$1.3276 Dollar/Canadian CAD=D3 1.2715 1.2777 -0.49% -0.15% +1.2785 +1.2712 Aussie/Dollar AUD=D3 $0.7168 $0.7132 +0.53% -6.81% +$0.7173 +$0.7119 Euro/Swiss EURCHF= 1.0414 1.0413 +0.01% -3.64% +1.0433 +1.0406 Euro/Sterling EURGBP= 0.8507 0.8523 -0.19% -4.81% +0.8527 +0.8494 NZ NZD=D3 $0.6866 $0.6824 +0.62% -4.39% +$0.6867 +$0.6818 Dollar/DollarDollar/Norway NOK=D3 9.0255 9.0345 -0.08% +5.12% +9.0510 +9.0120 Euro/Norway EURNOK= 10.2500 10.2457 +0.04% -2.07% +10.2668 +10.2070 Dollar/Sweden SEK= 9.0191 9.0200 +0.14% +10.04% +9.0426 +8.9951 Euro/Sweden EURSEK= 10.2425 10.2286 +0.14% +1.65% +10.2621 +10.2000 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5E^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
