Forex news from the European trading session - 26 November 2021
Headlines:
- EU wants to consider suspending travel links with countries where new COVID-19 variant has been identified
- Evergrande founder offloads roughly 9% stake for $344 million amid debt crisis
- WHO to hold midday conference to analyse new COVID-19 variant B.1.1.529
- Oil taking it on the chin as new COVID-19 variant throws a massive wrench into the works
- Italy, Germany to ban entry from S.Africa amid fears of new COVID-19 variant
- Switzerland Q3 GDP +1.7% vs +2.0% q/q expected
- EU to propose to activate emergency brake to stop air travel from southern Africa
- Germany October import price index +3.8% vs +2.1% m/m expected
- Singapore to restrict arrivals from S.Africa, nearby countries on new COVID-19 variant
- Japan to tighten borders for South Africa, five other nations on new COVID-19 variant
- Risk-off mood dominates amid fears of COVID-19 variant
Markets:
- JPY leads, CAD lags on the day
- European equities sharply lower; S&P 500 futures down 1.7%
- US 10-year yields down 12 bps to 1.524%
- Gold up 1.2% to $1,809.81
- WTI down 6.4% to $73.37
- Bitcoin down 8.9% to $53,623
The new COVID-19 variant from South Africa is stealing the show in markets today as fear emanates across all asset classes in a classic day of flight to safety.
The WHO is currently deliberating if the latest strain is to be deemed a "variant of concern" as many countries are already taking precaution in tightening border controls with the southern African region throughout the day.
The negative reception is weighing heavily on equities, with European indices at one point saw declines of roughly 4% across the board before those losses were trimmed as the fearmongers take a bit of a breather after the opening hour of trade.
But there was no let up in the bond market as bids continue to flow in with 10-year Treasury yields down by 12 bps to 1.524% and 2-year yields down by the most since March last year amid a decline of 11 bps to 0.53%.
The shove lower in yields is putting the yen in pole position in the major currencies space with USD/JPY sinking from 114.50 to 113.66 before seeing a quick bounce to 114.20. But the sour mood is persisting and now we're seeing price lurk lower to 113.90-00 again.
The franc is the other key beneficiary with USD/CHF tumbling from 0.9320 to 0.9250 on the session, with the dollar only seeing an advance against the commodity currencies.
AUD/USD saw a drop from 0.7140 to 0.7115, coming close to a test of its August low of 0.7106 before bouncing back a little to 0.7140 now - still down 0.7% though.
Meanwhile, NZD/USD dropped from 0.6830 in late Asia trading to test its August lows of 0.6805-09 before holding around 0.6820-30 now but is still down 0.5% on the day.
The loonie is the biggest loser as USD/CAD pushed up from 1.2710 to 1.2770 as oil prices were crushed amid demand outlook fears as the new COVID-19 variant threatens to scupper the global reopening and travel.
WTI was trounced from $76 to a low of $72.60 as the decline hit a whopping 7% drop before keeping around $73 levels at the moment.
There might be some let up in the rout amid thinner market conditions later today but with the weekend approaching, expect the heavy risk sentiment to prevail until the close.
