Yen bid as new Covid-19 variant hits risk mood
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<p><strong>Overnight Headlines</strong></p>
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<p>*USD was mixed against its peers in thin holiday trade</p>
<p>*US stock futures are firmly in the red on the new Covid-19 variant</p>
<p>*Gold rebounds from SMA support above $1800</p>
<p>*Oil drops over 2% on fears over reopening demand</p>
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<p><strong>USD</strong> remained near recent highs. Safe havens were bid as the new South African variant shook risk sentiment. JPY and CHF have taken centre stage with commod$s suffering. AUD is heading for the year-to-date August low at 0.7105. NZD is on its sixth straight day of declines, closing in on the 0.6805 August low. GBP/USD posted new lows for the year close to 1.33.</p>
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<p><strong>US equities</strong> were closed for Thanksgiving. Markets in Asia have seen steep falls, suffering their sharpest drop in three months. Hospitality and travel stocks are getting hammered. US futures are seen down roughly 1% currently. European markets are set to open over 2% lower.</p>
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<p><strong>Market Thoughts – Covid concerns blow up</strong></p>
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<p>Markets were relatively quiet yesterday with stocks mildly stronger with the US closed. That has changed rapidly overnight after the detection of a new and possibly vaccine-resistant coronavirus variant in South Africa. Investors have dumped risk assets and flocked to havens.The South African rand has fallen to its lowest in a year. The dollar has fallen back versus the yen and swissie.</p>
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<p>The major concern is the mutation profile, which could make current vaccines less effective. Data is still incoming, but markets are acting first. The WHO hold a meeting later today on the variant, so it will be worth listening to the wires.</p>
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<p><strong>Chart of the Day – Yen crosses on a tear</strong></p>
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<p>It’s tough to pick out one JPY pair when we see moves of this magnitude. It’s a Friday and over a US holiday so price action may be exaggerated with illiquid volumes. GBP/JPY and NZD/JPY look interesting as they break down and approach long-term SMAs. </p>
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<p>The former has fallen through the 50-day and 100-day SMA today. It is currently trading on the 200-day SMA around 152.39. Previous November support sits right here, and a Fib level was touched earlier in the session. If see more downside and a weak close, bears will target the next Fib level at 150.54. A bounce will come into initial resistance at 152.64, the 100-day SMA.</p>
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