U.S. dollar retreats on global flight for safe haven

The U.S. dollar fell substantially in late trading on Tuesday as global investors chased safe haven assets amid concerns over COVID-19 variant Omicron.

Warnings from pharmaceutical executives about less efficacy of current COVID-19 vaccines or treatment against the variant triggered resurgence of investors’ concerns.

The dollar index, which measures the greenback against six major peers, fell 0.33 percent at 96.0105 in late trading.

The U.S. dollar weakened significantly as the globe copes with the prospect of new challenges from the Omicron variant that threatens to be resistant to current vaccines, said a note by foreign exchange and international payment solutions provider Tempus, Inc. on Tuesday.

The euro rose to its best level in two weeks as the new situation developing hurt the prospects of the Federal Reserve moving quickly toward tightening its monetary policy, said Tempus.

The comments from U.S. Federal Reserve Chairman Jerome Powell at a hearing before the Senate Banking Committee failed to bring sustained strength to the U.S. dollar.

“The economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner,” Powell said on Tuesday morning.

Powell also suggested that the central bank would stop using the word “transitory” to describe the nature of recent price increases.

In late New York trading, the euro rose to 1.1320 dollars from 1.1274 dollars in the previous session, and the British pound was down to 1.3279 dollars from 1.3293 U.S. dollars in the previous session. The Australian dollar fell to 0.7120 dollar from 0.7129 dollar.

The U.S. dollar bought 113.10 Japanese yen, lower than 113.71 Japanese yen of the previous session. The U.S. dollar decreased to 0.9187 Swiss franc from 0.9245 Swiss franc, and it increased to 1.2786 Canadian dollars from 1.2769 Canadian dollars.