US Dollar Index (DXY) Falls on New Variant, Still Poised for Weekly Gain

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The US dollar is weakening to close out the holiday-shortened trading week, driven by the sharp selloff in the broader financial markets. The conventional safe-haven asset has been the top-performing currency this year, but it could not survive the market crash on Friday.

On Thursday, the World Health Organization (WHO) confirmed that it would be holding a special emergency meeting on Thursday to discuss a new COVID-19 variant that contains many mutations.

Despite the urgent response to a variant that was first discovered in Botswana, Hong Kong, and South Africa, WHO officials urged the world not to have a knee-jerk reaction. The international body’s response comes after many countries imposed travel bans on South Africa.

Dr. Michael Ryan, WHO head of emergencies, stated that it is important to study the data and remain patient about the strain, likely to be named nu.

“We’ve seen in the past, the minute there’s any kind of mention of any kind of variation and everyone is closing borders and restricting travel. It’s really important that we remain open, and stay focused.”

In light of the news, Belgium already reported cases of the heavily-mutated variant.

The U.S. is currently studying the data, while the UK Health Security Agency is already investigating the variant.

“This is the most significant variant we have encountered to date and urgent research is underway to learn more about its transmissibility, severity and vaccine-susceptibility,” said U.K. HSA Chief Executive Jenny Harries.

Nearly every asset class in the global financial markets were deep in the red, except for gold and natural gas.

The US Treasury market was read across the board, with the benchmark 10-year bond down 0.135% to 1.509%. The one-year bill shed 0.035% to 0.178%, while the 30-year bond shed 0.118% to 1.853%.

The US Dollar Index (DXY), which measures the greenback against a basket of currencies, plunged 0.67% to 96.13, from an opening of 96.72. The index is still poised for a weekly boost of 0.1%, lifting its year-to-date gain to nearly 7%.

The USD/CAD currency pair surged 0.87% to 1.2758, from an opening of 1.2649, at 16:46 GMT on Friday. The EUR/USD rose 0.75% to 1.1294, from an opening of 1.1211.

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