News broke yesterday regarding a new Covid variant which sent markets into risk-aversion mode. After discovery in Southern Africa, and cases identified in Hong Kong, the UK and EU are moving to halt air travel from the region. Scientists are unsure of the strain's resistance to vaccines. As governments work to digest risk associated with the variant equity, markets sell off this morning in a risk off move. Risk reversal has also impacted bets on central banks and rate increases. Traders have pushed out bets on the Fed to raise rates from June to September of 2023 and now see a rate hike in February instead of December from the BoE.
November 26, 2021
EUR/USD 1.1290 GBP/USD 1.3330 USD/CAD 1.2788 AUD/USD 0.7142 USD/JPY 113.56 USD/CNH 6.3924 USD/ILS 3.1829 USD/MXN 21.8067 USD/CHF 0.9254 USD/INR 74.87 USD/BRL 5.5838 USD/SGD 1.3713 USD/DKK 6.5859 USD/SEK 9.1027 USD/NOK 9.0404
The dollar is lower versus some G-10 peers as the world reacts to uncertainty surrounding an emerging covid variant. There are no data releases or fed speakers scheduled for today.GBPThe pound slid to 11 month lows overnight versus the dollar amid global risk-off sentiment. The UK has suspended flights to six African countries and imposed quarantine rules for travelers to the UK.EUR
Euro showed an uptick after hitting sixteen-month lows and is consolidating below 1.1300. The gains in the euro is likely driven by short covering.CAD
The Canadian dollar lost ground as traders reduce risk exposure in the face of covid concerns. Investors fear the newly discovered variant could hurt global economic recovery and sold off the commodity driven currency.ASIA/PACIFICUSDJPY sank from over 115 to the high 113’s as the Japanese yen won the risk-aversion trade.
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