Rise of new Covid variant sparks risk-off trade in Asia

With little in the way of news flow and the US on a public holiday over Thanksgiving, odds favoured a quiet session. Yet with reports that researchers in South Africa detected a new variant, which may be less effective against vaccinations has soured sentiment. The UK was quick to respond by introducing travel restrictions with South Africa and neighbouring countries, with UK Health Secretary Sajid Javid telling broadcasters that “there’s a significant number of mutations, perhaps double the number of mutations that we have seen in the Delta variant”. But what really shook confidence today was the discovery of two new-variant cases in Hong Kong.

The Japanese yen is the strongest currency of the session as traders flocked to the currency as a safety play. AUD/JPY and NZD/JPY (barometers of risk for currency traders) are the weakest pairs of the session and their daily ranges have already met their ATR’s (average true ranges).

AUD/JPY leads the yen pairs lower

AUD/JPY is certainly a market to watch to see if there is any follow-through. Earlier today, the assumption was that 82.0 would hold as support and see the cross break higher, in line with risk-appetite in the US. Yet prices are now probing the key support zone, with a break below 82.0 likely to trigger some large stops and exacerbate a downside move. Also note that prices have now accelerate away from the 200-day SMA and trades within a bearish channel. For now, the bias remains bearish below today’s high and for a break below 82.0. And how traders across Europe react at the open should provide an early insight into how the final day of the week will play out.

Nikkei 225 falls below 29k

The Nikkei 225 has also accelerated lower. The daily was the open price, which was at the 18,336/81 resistance zone and prices promptly fell below the 50, 200-day SMA’s and now 29k. As the market has clearly topped out and broken a trendline on the daily chart we suspect the market could now be headed for the lows around 28,4733.

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor