USD and JPY rose upon fear over Delta variant, Vietnam pledged not to devalue its local currency

Safe-harbor currencies have witnessed series of increases, with both JPY and USD holding near their multi-month highs against riskier currencies such as AUD and GBP. Pairs such as JPYAUD and JPYGBP have all experienced strong upward. The fear is growing as the Delta variant becoming the dominant COVID strain around the globe. In Australia, more than 10 million population is currently living under lockdowns to combat the Delta variant. In the UK, Boris Johnson is also in self-isolation after the health minister tested positive. However, RBA has recently surprised the market with a decision to taper its bond-buying scheme this month, mainly based on the rebound in the labor market.

Vietnam has pledged not to devalue its local currency in an agreement with the US Treasury. The country has benefited from the shift of US supply chains away from China during the tariff conflicts. Vietnam has witnessed its trade surplus jumping by 25% in 2020 despite the pandemic. Furniture, electronics, computers, and apparel are among the favorite sources of imports.