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The AUD/USD fell 1% to 0.7115 as the pressure on risk trades increased.
The attitude in the pair is quite similar to that of the NZD/USD, as previously discussed here, with sellers targeting a test of the August lows of 0.7106 presently.
A break below their gives very little room for a push back towards testing 0.7000, implying that the negative pressure seen so far today has the potential to continue.
The new COVID-19 variety, as well as the related worries, are overpowering the market. It’s difficult to focus on anything else during the Thanksgiving holiday, but lighter trading circumstances may be worsening some of the changes.
Italy and Germany
Fear is still reverberating across the world, Italy. Germany has decided to prohibit immigration from South Africa due to concerns about the latest COVID-19 type.
Due to the new COVID-19 variation, Italy claims it would impose an entrance bar on those who have visited a group of southern African states (specifically South Africa, Lesotho, Botswana, Zimbabwe, Mozambique, Namibia, and Eswatini) in the recent 14 days.
Meanwhile, Germany has designated South Africa as “a nation with a COVID-19 version of concern,” with the government stating that most travel from South Africa will be prohibited due to the new COVID-19 variant.
The oil and gas sector is down more than 4%, while the banking index is down close to 5%, with travel and leisure suffering the most, plummeting over 6% to a new 10-month low as the year begins.
According to the most recent updates on the virus, Germany has declared South Africa as “a nation with a COVID-19 version of concern,” while the new variety is claimed to have already found its way to Israel, with the health ministry identifying the first case there.
The Swiss economy expanded less than projected in the third quarter, but the recovery is still on track.
By the summer, the majority of the public health restrictions had been eliminated or significantly reduced. As a result, the biggest increase in the third quarter occurred in industries most affected by the precautionary measures. Overall, GDP in the third quarter was more than 1% higher than the pre-crisis level recorded in the fourth quarter of 2019.
The most significant growth in economic activity, according to the report, was in lodging and food services, where value-added more than quadrupled compared to Q2.
As we approach the August lows of 0.6805-09, which is a crucial support level for the pair, it is an important time for NZD/USD buyers to step up and be counted.
A break below that level, particularly below 0.6800, will likely see a negative pressure increase, with little preventing a further push below the 61.8 retracement level of the surge upward from March last year to February this year @ 0.6702 next.
The market is gripped by panic about the new COVID-19 variation, and it does not appear that this will abate by the end of the day.
A significant setback for USD/JPY buyers as the week comes to a close.
The pair has dropped to new lows for the day at 114.40 as sellers reclaim near-term control following a push below the major hourly moving averages:
There is some tiny support around 114.45-49, but a decline towards 114.00 is possible as the market maintains its gloomy tone from earlier.
Bond rates are falling more, and equities are losing ground as we enter European morning trade. Even oil is down more than 4% on the day, with WTI falling below $75 as it approaches its 100-day moving average of $74.46.
Returning to the USD/JPY, this is a significant setback for buyers who were on the verge of achieving a break over 115.00. It’s a case of “close but no cigar”
Risk trades have taken a beating as markets tremble in response to reports of a new COVID-19 strain originating in South Africa. The ‘Nu’ variation is exacerbating fears at a time when liquidity is scarce due to the Thanksgiving break.
US equities and bonds will be available for trading later but only for a half-day. And considering that it is Thanksgiving, most traders will be gone until next week.
However, despite concerns over the ‘Nu’ variety, we can plainly see how the jitters are echoing, even though the movements may have been accentuated by lighter trade in the previous twelve hours or so.
The major one to monitor will be oil. Since a lot of the optimistic connotations there rely on resuming demand and putting the epidemic in the rearview mirror. As a result, this latest variation throws a big curveball into the mix.
We’ll only have a clearer idea of how things will unfold based on the new COVID-19 variation. But for now, it’s difficult to gamble against the market tone ahead of the weekend, leaving the world susceptible.