Asian Open Omicron spreads to its 29th country (including the US)

A fully vaccinated traveller returning from South Africa to the US tested positive upon arrival to the states, just hours after airlines were told to provide names of passengers from southern Africa who had known Omicron outbreaks. According to the World Health Organisation (WHO) the variant has now spread to 29 countries.

US equities were predictably lower, with the Russel 2000 and Dow Jones transportation stocks leading the way and the VIX rising to just shy of 30, its highest level since March. The Dow Jones is below its 200-day SMA for the first time since June 2020 and the Nasdaq 100 has formed a head and shoulders top on the daily chart.

Supply chain issues persist in US manufacturing

The ISM report reiterated what we have come to expect, with the manufacturing sector remaining within a “demand-driven, supply-constrained environment” with slight improvements in labour and supplier deliveries. Record-long lead times for raw materials and capital equipment and high commodity prices continue to dampen all sub-sectors.

Nice. And there is little chance of this improving with the new variant making its rounds and forcing tighter restrictions the globe over. And whilst prices paid moved lower we need to factor in this survey doesn’t capture the potential impact of Omicron so inflation is not looking very transitory right now, not that it ever was really.

113 remains an important battleground for USD/JPY

Equities lower, yen higher remains to be the theme of the week. 113 remains an important battleground on USD/JPY as price action has whipsawed violently around it over the past 48 hours. Yet its inability to close to new lows should not go unnoticed, whilst a daily close above it this week may result in a strong reaction like seen on November 10^th the last time 113 was a battle ground. We just need risk-off to ease a little and yield differentials should support it once more.

NZD/CAD coils up into a potential bearish wedge ahead of OPEC

The commodity FX cross is coiling up on the four-hour chart into a potential bearish wedge formation. It saw an aggressively bearish move into the pattern, hence the bias for an eventual downside breakout from it. Such patterns can continue to grind away before breaking out suddenly to the red lines need to be taken with a pinch of salt and adjusted accordingly, but we’d be interested in short opportunities below the resistance zone.

Commodities lower on demand concerns

With rising cases comes concerns of travel restrictions and lockdowns. And with that comes demand concerns, which has weighed broadly on commodities. The Thomson Reuters CRB index fell to a 6-week low of 218 and is now down around -9.5% from its highs.

WTI failed to retest $70 before giving way to the downside and is holding just above Tuesday’s low ahead of today’s OPEC meeting. There is a decent chance OPEC will hold off from increasing their oil output and traders could even be prepared for the chance of a cut, in hopes of supporting prices.

Gold appears confused as it makes mild attempts to behave as a safe-haven with its marginal gains, yet concerns over the economic recovery and hawkish comments from the Fed mean investors may be selling their gold to fund losses elsewhere or simply move to cash.

ASX 200 Market Internals:

ASX 200: 7235.9 (-0.28%), 01 December 2021

Materials (0.57%) was the strongest sector and Consumer Staples (-1.87%) was the weakest
8 out of the 11 sectors closed lower
4 out of the 11 sectors outperformed the index
41 (20.50%) stocks advanced, 149 (74.50%) stocks declined
55% of stocks closed above their 200-day average
31% of stocks closed above their 50-day average
23% of stocks closed above their 20-day average

Outperformers:

+ 3.97%-South32 Ltd(S32.AX)
+ 3.11%-Waypoint REIT Ltd(WPR.AX)
+ 2.71%-Lynas Rare Earths Ltd(LYC.AX)

Underperformers:

-7.58%-GUD Holdings Ltd(GUD.AX)
-7.39%-Pro Medicus Ltd(PME.AX)
-6.00%-IDP Education Ltd(IEL.AX)

Up Next (Times in AEDT)

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.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.