LONDON Reuters Currency markets still showed signs of risk aversion on Wednesday after global markets were spooked earlier in the week by surging COVID19 infections, with the safehaven dollar rising to its highest since early April.
The Delta variant of coronavirus has replaced inflation as investors primary source of concern this week, prompting global stocks to drop sharply on Monday.
The dollar held firm during the Asian session but rose as European markets opened. Versus a basket of currencies, the dollar was up 0.2 at 93.166 at 0718 GMT, its highest in 3.5 months.
COVID market fears looked too low a month ago, now perhaps a bit high, Elsa Lignos, global head of FX strategy at RBC Capital Markets, wrote in a client note.
Lignos said she expected the fears around the Delta variant to fade as vaccine takeup rises, unless a new more infectious variant of the virus emerges.
The Australian dollar, which is seen as a liquid proxy for risk appetite, fell to its lowest since November 2020, down 0.5 on the day at 0.72905, while the New Zealand dollar was also close to eightmonth lows.
Australias two largest states reported sharp increases in new COVID19 cases on Wednesday, a blow to hopes that lockdown restrictions would be lifted as more than half the countrys population was subject to stayathome orders.
The British pound, which on Tuesday hit its lowest since February, was down 0.2 at 1.3604.
Analysts cited a standoff between Britain and the European Union as a…