FOREX-U.S. dollar gains as Powell says risk of inflation has increased

BY Reuters | ECONOMIC | 11/30/21 11:55 AM EST
    (Recasts, adds Powell's comments, FX table, changes byline, dateline; previous LONDON)
    * Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

    By Caroline Valetkevitch
    NEW YORK, Nov 30 (Reuters) - The U.S. dollar strengthened on Tuesday after Federal Reserve Chair Jerome
Powell said the risk of inflation had increased and suggested retiring the term "transitory" for inflation,
while worries about the new Omicron coronavirus variant kept a bid in safe-haven currencies.
    During a hearing with the U.S. Senate Banking Committee, Powell also said higher prices are generally
related to the pandemic.
    The dollar index turned positive after the Powell comments and was last up 0.1% at 96.331.
    Earlier, the Japanese yen and Swiss franc rose against the dollar, after Moderna's (MRNA) CEO said the
coronavirus vaccines will likely be less effective against the Omicron variant as they have been against
other variants.
    Adding to the fears, drugmaker Regeneron Pharmaceuticals Inc (REGN) said on Tuesday its COVID-19
antibody treatment could be less effective against Omicron.
    The warnings reinforced a view that the global economy could take longer to return to pre-pandemic
levels than many had been expecting.
    Against the U.S. dollar, the euro was last down 0.1% at $1.1279 and the single currency
earlier registered its biggest three-day rising streak since December 2020.
    The Japanese yen was last up 0.2% at 113.31 per U.S. dollar.
    "Traders are in 'sell first and ask questions later' mode. You are seeing that global flight to safety,"
said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
    Prior to Omicron's arrival, the main driver of currency moves was how traders perceived the different
speeds at which global central banks would end pandemic-era stimulus and raise interest rates as they looked
to combat rising inflation without choking off growth.
    Cryptocurrencies also had a volatile trading session. Ethereum was last up about 4% at $4,638
. Bitcoin was down 0.6% at $57,453.

    ========================================================
    Currency bid prices at 11:29AM (1629 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change
                                              Session
 Dollar index                 96.3150        96.1990     +0.13%         7.039%        +96.6470    +95.5440
 Euro/Dollar                  $1.1279        $1.1293     -0.13%         -7.69%        +$1.1387    +$1.1235
 Dollar/Yen                   113.3900       113.5300    -0.12%         +9.74%        +113.8900   +112.5350
 Euro/Yen                     127.88         128.19      -0.24%         +0.76%        +128.6000   +127.6800
 Dollar/Swiss                 0.9220         0.9227      -0.08%         +4.21%        +0.9266     +0.9158
 Sterling/Dollar              $1.3242        $1.3318     -0.55%         -3.06%        +$1.3370    +$1.3195
 Dollar/Canadian              1.2799         1.2738      +0.49%         +0.53%        +1.2837     +1.2732
 Aussie/Dollar                $0.7095        $0.7143     -0.69%         -7.79%        +$0.7170    +$0.7063
 Euro/Swiss                   1.0396         1.0418      -0.21%         -3.80%        +1.0444     +1.0391
 Euro/Sterling                0.8515         0.8477      +0.45%         -4.72%        +0.8526     +0.8474
 NZ                           $0.6795        $0.6825     -0.44%         -5.38%        +$0.6856    +$0.6773
 Dollar/Dollar
 Dollar/Norway                9.1105         9.0455      +0.68%         +6.06%        +9.1260     +9.0150
 Euro/Norway                  10.2775        10.1786     +0.97%         -1.81%        +10.3158    +10.1737
 Dollar/Sweden                9.0764         9.0594      +0.04%         +10.74%       +9.1103     +9.0069
 Euro/Sweden                  10.2381        10.2336     +0.04%         +1.60%        +10.3036    +10.2077


 (Additional reporting by Saikat Chatterjee in London; Editing by Bernadette Baum)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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