- B.1.1.529 – RISK OFF – JPY, CHF & USD bid – AUD, NZD & CAD pressured – Stocks & Oil tank. (-2.5%) Treasuries in demand as yields slip.
UK, Singapore, Taiwan & Israel ban flights from 6 South African Countries – 2 x cases also detected in Hong Kong. “B.1.1.529, has a spike protein that was dramatically different to the one in the original coronavirus that COVID-19 vaccines are based on.” - USD (USDIndex 96.61) holds on around 16-mth highs; elsewhere AUDJPY down 1.4% and still falling, currently.
- The ECB Minutes – inflation coming down below 2% in the medium term, elevated inflation uncertainty & possible upside risks were flagged, bank needed to maintain a degree of flexibility on the future policy path The minutes flagged that PEPP could be phased out in steps until the end of the program in March next year, which be expect to be confirmed at the December meeting.
- US Yields 10yr trades at 1.54%, down from over 10bps
- Equities – Asian markets sink -2.5% (Nikkei) – USA500.F tanks from a close at 4705 to trade at 4624.
- USOil – glugs over 3.5% lower to $74.50, closed $77.42
- Gold rallies from $1788, breaches $1800 to trade at $1802.
- FX markets – EURUSD now 1.1234, USDJPY now 114.40 & Cable back to 1.3300.
Overnight – JPY Tokyo CPI inline, AUD Retail Sales big beat (4.9% vs 2.2%) and German Import prices leap +3.8% m/m, a whopping 21.7% in October, up from 17.7% in the previous month. Energy prices were again the main culprit +20.7% m/m jump in October that left prices 141% higher than in October last year.
European Open – The December 10-year Bund future is up 94 ticks at 171.92, Treasuries have outperformed and the ultra long end in both Germany and the U.S. have seen a huge rise in demand as the detection of a new virus variant that is feared to render vaccines much less effective spooked markets. DAX and FTSE 100 futures are down -1.9% and -2.2% respectively, while a 1.7% slide in the Dow Jones is leading the sell off in U.S. futures.
Today – CHF GDP, EZ M3 Money Supply, ECB’s Lagarde, Schnabel, Panetta, BoE’s Pill.
Biggest FX Mover @ (07:30 GMT) AUDJPY (-1.75%) Risk Off – sell off of the most sensitive FX pair. Daily support 81.00, 80.50 and then 80.00. MAs aligned lower, MACD signal line & histogram falling & under 0 line, RSI 7.3 OS & still falling. H1 ATR 0.208, Daily ATR 0.768.
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Stuart Cowell
Head Market Analyst
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