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Market movers today

• Black Friday data calendar is thin. Expect low volume-trading as many Americans still enjoy a day off.
• A new COVID-19 variant (so called B.1.1.529) observed in South Africa is a key focus for markets today. The WHO will hold a meeting on the variant today. While it is unclear how transmissible it is, a key concern is that it may have a mutation profile that makes vaccines less effective.
• Furthermore, we continue to keep a close eye on any announcements by European governments or authorities on potential new restrictions, vaccine requirements or lockdowns as new cases keep on rising across Europe.
• In Norway, we expect retail sales to weaken further as spending on services increases with the reopening of the economy (see Nordic section for more details).
• In the rating space, we may get update from Moody's on Belgium and from S&P on Ireland.

The 60 second overview

New COVID-19 variant hits global risk sentiment: Global risk sentiment was hit overnight by rising fears of a new possibly highly transmittable COVID-19 variant/mutation called B.1.1.529 that has been observed in South Africa. There isn't much evidence yet, but it could have the ability to be spreading rapidly even though a huge incident spike on Nov 23 from South Africa fortunately was related to a data error. A key concern about the new variant is its mutation profile, which has the potential to make the current vaccines less effective. Data is still incoming so prevalence graphs etc. needs to be interpreted with care. The U.K. issued a temporary ban on flights from six African countries, and Australia said it wouldn't rule out tightening border rules for travelers from southern Africa if the situation escalates. The USD and Japanese Yen, both typically safehaven currencies, rose on the back of the news.

Equitiy markets in Asia fall sharply this morning: Equity markets in Asia and Europe enjoyed a relative quiet day yesterday as US was closed for Thanks Giving celebration. Most sectors were higher but defensives managed to outperform cyclicals with utilities as the best performing sector yesterday.

This morning thing are upside down as fears of the new Covid-19 variant B.1.1.529 draining all risk appetite. All markets in Asia sharply lower while US futures are down roughly 1% and European markets are down roughly 2% at time of writing.

FI: There was modest movements in global bond yields yesterday with US markets closed for Thanksgiving. 10Y German government bond yield declined a few bp, but spreads remain elevated like the 10Y BTPS-Bund spread around 130bp and the Bund ASW-spread just below 50bp.

FX: EUR/GBP started the day by moving higher but ended the day closer to 0.84 due to more positive Brexit headlines and some hawkish comments from the Bank of England governor Andrew Bailey. EUR/SEK drifted lower after yesterday's Riksbank meeting and was trading below 10.20 at the time of writing.

Credit: Sentiment in credit markets remained gloomy yesterday. iTraxx Xover widened 4.5bp and Main 1.1bp. HY bonds closed 3bp wider and IG 2bp wider.

Nordic macro

There were few surprises from the Riksbank yesterday. The monetary policy path was more or less unchanged and the Riksbank still believes that the rise in inflation is transitory. The Riksbank will buy more government bonds in 2022 than expected and more or less absorb the entire gross issuance from the Debt Office. See more in our Fast Comment Riksbank from yesterday.

In Norway, retail sales for October is released today. Retail sales have fallen sharply for the past three months but are still almost 6% above pre-Covid levels. We expect them to weaken further as spending on services increases with the reopening of the economy and increase in mobility. We reckon this effect will be particularly clear in October as the first full month after the nationwide reopening. Electricity bills were probably also much higher than in previous months, so we expect retail sales to fall 1.5% from September.

Daily Pivots: (S1) 1.2634; (P) 1.2655; (R1) 1.2670; More...

USD/CAD is staying in consolidation from 1.2743 and intraday bias remains neutral first. Further rise is expected as long as 1.2491 support holds. Above 1.2743 will resume the rise from 1.2286 to retest 1.2894/2947 resistance zone. However, break of 1.2491 will indicate that such rise has completed, and turn bias back to the downside for 1.2286 support.

In the bigger picture, medium term outlook is neutral for now. The pair drew support from 1.2061 cluster and rebounded. Yet, upside was limited below 38.2% retracement of 1.4667 to 1.2005 at 1.3022. On the upside, firm break of 1.3022 should affirm the case of medium term bullish reversal. However, break of 1.2286 will turn focus back to 1.2005 low again.

Daily Pivots: (S1) 1.0467; (P) 1.0481; (R1) 1.0503; More....

EUR/CHF's down trend resumes by breaking 1.0446 and intraday bias is back on the downside. Current fall from 1.1149 should target 161.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0200 next. On the upside, however, break of 1.0511 minor resistance will indicate short term bottoming and turn bias back to the upside for stronger rebound.

In the bigger picture, down trend from 1.2004 (2018 high) should be resuming with break of 1.0505 (2020 low). Next target is 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. On the upside, break of 1.0694 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 0.8396; (P) 0.8416; (R1) 0.8433; More...

The break of 4 hour 55 EMA suggests that stronger rebound is in progress in EUR/GBP. Intraday bias is mildly on the upside for 55 day EMA (now at 0.8485). Break there will target 0.8593 structural resistance. On the downside, though, break of 0.8379 will resume larger down trend towards 0.8276 key long term support.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8593 resistance holds, towards long term support at 0.8276. We'd look for bottoming signal around there to bring reversal. However, sustained break of 0.8276 will but a sign of long term bearish reversal.

Daily Pivots: (S1) 1.5550; (P) 1.5591; (R1) 1.5630; More...

Immediate focus is now on 1.5743 resistance with today's rally in EUR/AUD. Firm break there, will have 55 day EMA taken out too, would argue that whole decline from 1.6434 has completed at 1.5354 already. Intraday bias will be back on the upside for 1.5907 support turned resistance first. On the downside, though, break of 1.5446 support will resume the fall from 1.6434, through 1.5354, to retest 1.5250 low.

In the bigger picture, the down trend from 1.9799 (2020 high) is in progress. Firm break of 1.5250 low will confirm resumption and target 61.8% retracement of 1.1602 (2012 low) to 1.9799 at 1.4733. Sustained break there could bring more downside acceleration to 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623. In any case, break of 1.6434 resistance is needed to signal medium term bottoming, or outlook will stay bearish.

Daily Pivots: (S1) 129.20; (P) 129.36; (R1) 129.48; More....

Intraday bias in EUR/JPY remains neutral for the moment. As long as 129.97 resistance holds, further decline remains mildly in favor. Firm break of 127.91 support will extend the whole corrective pattern from 134.11, to 126.58 medium term fibonacci level next. On the upside, however, break of 129.97 resistance will indicate short term bottoming, and turn bias back to the upside for rebound back towards 133.44 high.

In the bigger picture, as long as 38.2% retracement of 114.42 (2020 low) to 134.11 at 126.58 holds, up trend from 114.42 is still in favor to continue. Break of 134.11 will target long term resistance at 137.49 (2018 high). However, sustained break of 126.58 will raise the chance of medium term bearish reversal. In this case, deeper decline would be seen to 61.8% retracement at 121.94, and possibly below.

General trend

• Commodity currencies decline on the lower oil and iron ore prices; ZAR drops over 1%; Gold FUTs rise.
• Equity markets have generally extended declines.
• US equity FUTs reversed gain, DOW FUTs lag; US markets to return from holiday.
• Nikkei has declined by over 2.8%; Stronger yen weighs on automakers, Softbank Group declines amid the DiDi news.
• Hang Seng has lost over 2%; Tencent drops amid continued regulatory concerns; Casino names drop after China/HK meeting on travel; Meituan is due to report results after the market close.
• Property indices decline in Shanghai and HK; Fantasia and Evergrande have been in focus.
• Shanghai Composite traded modestly lower during the morning session (-0.5%).
• Australian Energy, Financial and Resources indices lag; travel names also drop.
• WHO is due to meet on the new COVID variant.

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.1%.
• (NZ) Reserve Bank of New Zealand (RBNZ) Hawkesby: Affirms need to continue removing stimulus; sees risk inflation expectations could lift, inflation expectations will be key for the RBNZ.
• (NZ) RBNZ Gov Orr to speak at Bank of Canada conference on Nov 30th (Tuesday).
• (NZ) New Zealand Nov ANZ Consumer Confidence: 96.6 v 98.0 prior; M/M: -1.4% v -6.2% prior.
• (AU) Australia APRA Finalizes guidance on financial risks on climate change; No new regulations or requirements are being instituted.
• (AU) Australia sells A$1.5B v A$1.5B indicated in 0.25% Nov 2025 bonds, Avg Yield: 1.3087%, bid-to-cover 2.46x.
• (AU) Australia Oct Retail Sales M/M: 4.9% v 2.2%e.

Japan

• Nikkei 225 opened -0.6%.
• (JP) Japan Nov Tokyo CPI Y/Y: 0.5% V 0.4%E; CPI (Ex-Fresh Food) Y/Y: 0.3% V 0.3%E (Fastest increase since July 2020).
• (JP) Young households in Japan to be given low-energy home subsidies; the subsidy is expected to total up to ¥1M - Japanese press.
• (JP) Japan PM Kishida said to seek ~3.0% wage increase in the Spring wage talks [shunto talks]; notes it has been years since a Japanese PM has set a numerical target for wages - Japanese press.
• (JP) Japan to extend 5G investment tax deduction - Japanese press.
• (JP) Japan Investors Net Buying of Foreign Bonds: -¥12.8B v +¥465.3B prior; Foreign Net Buying of Japan Stocks: -¥47.1B v +¥164.9B prior.
• (JP) Moody's affirms Japan A1 sovereign rating, outlook stable.
• (JP) Japan Govt confirms it will convene extra parliament session on Dec 6th - Press.

Korea

• Kospi opened -0.2%.
• (KR) South Korea expected to announce additional quarantine steps on Nov 29th (Monday).

China/Hong Kong

• Hang Seng opened -1.0%; Shanghai Composite opened -0.2%.
• (CN) China PBOC sets Yuan reference rate: 6.3936 v 6.3980 prior.
• (CN) China PBOC Open Market Operation (OMO): q33Sells CNY100B in 7-day reverse repos v CNY100B prior; Net inject CNY50B v Net inject CNY50B prior.
• (CN) China may set the 2022 special bond issuance quota at CNY3.2T v CNY3.65T y/y - Chinese press.
• (CN) China Economic Daily Commentary: Measures should be taken to secure grain supply, grain supplies expected to remain tight in the long-term.
• (CN) China Economic Information Daily Commentary: Digital yuan (CNY) trial should be expanded after the Winter Olympics.
• (HK) SCMP comments on Thursday's travel talks between HK and China officials: Hong Kong Chief Sec Lee Ka-chiu said HK has meet the basic requirements to reopen the border with mainland China but must tighten certain COVID controls before quarantine-free travel can resume.
• (CN) Japan and Vietnam to increase security cooperation in the South China Sea citing serious concerns - Press.
• China said to have asked DiDi [DIDI] to delist from US Exchanges citing security fears - Press.
• (CN) Beijing said to consider creating digital asset trading exchange - US financial press.
• (CN) Shanghai has cancelled certain flights due to coronavirus - Chinese media.
• (CN) China Ministry of Finance (MOF) Sells 3-month bills: avg yield 2.1027% v 2.1213% prior.

Other

• (MX) Mexico Central Bank (BANXICO) Nov Minutes: Rate hikes could make supply chain shocks worse; Must rule out prolonged, aggressive cycle.
• World Health Organization calls meeting of experts for later on Friday, Nov 26th to speak on whether to declare new coronavirus variant as a variant of concern.

North America

• US Markets closed for the Thanksgiving Holiday.
• (US) Adobe expects US Thanksgiving Day Total Online Spending at $5.1-5.4B.

Europe

• (EU) New COVID variant known as B.1.1.529 found in South Africa reportedly shows high number of mutations in spike - press.
• (UK) UK has suspended flights to 6 countries in Africa on new COVID variant - press.

Levels as of 00:20 ET

• Nikkei 225, -2.8%, ASX 200 -1.7% , Hang Seng -2.3%; Shanghai Composite -0.7% ; Kospi -1.7%.
• Equity S&P500 Futures: -1%; Nasdaq100 -0.6%, Dax -2%; FTSE100 -1.8%.
• EUR 1.1227-1.1206 ; JPY 115.40-114.59 ; AUD 0.7199-0.7133 ;NZD 0.6861-0.6817.
• Gold +0.8% at $1,797/oz; Crude Oil -3% at $76.07/brl; Copper -0.8% at $4.4032/lb.

Daily Pivots: (S1) 153.38; (P) 153.73; (R1) 154.03; More...

GBP/JPY is staying in range above 152.35 and intraday bias remains neutral first. With 154.70 resistance intact, further decline is expected . On the downside, break of 152.35 will resume the decline from 158.19 to 148.93 key support next. On the upside, however, break of 154.70 will turn bias back to the upside for retesting 158.19 high instead.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Further rally is still expected as long as 148.93 support holds. However, firm break of 148.93 will argue that the medium term trend has reversed and bring deeper fall back to 142.71 resistance turned support first.

Risk-aversion dominates Asian markets today as new coronavirus variant sinks investor sentiment. Australian Dollar is leading other commodity currencies lower. Yen and Swiss Franc surge sharply, followed by Euro and Dollar. Overall, it's flight to safety. The question now is, whether Aussie or Kiwi would eventually end as the worst performing one for the week, and whether Dollar would be overtaken by Yen and Swiss Franc.

Technically, Yen crosses could take the spotlights today. AUD/JPY has taken the lead in breaking 82.14 support to resume the fall from 86.24. GBP/JPY could break through 152.35 support to resume the fall from 158.19 soon. CAD/JPY might then follow and break through 86.69 support to resume the decline from 93.00 too. But most importantly, the question is whether USD/JPY would break through 113.57 support to complete the case of a broad based turn around in Yen.

In Asia, at the time of writing, Nikkei is down -2.82%. Hong Kong HSI is down -2.24%. China Shanghai SSE is down -0.57%. Singapore Strait Times is down -1.44%. Japan 10-year JGB yield is down -0.0094 at 0.076.

New coronavirus variant sends HK HSI sharply lower

Asian stocks tumble deeply today while US futures are trading sharply lower. The development reflects worries over a new coronavirus variant detected in South Africa. The country's Health Minister Joe Phaahla warned that there has been "more of an exponential rise" in infections over the last four of five days.

UK is banning flights from South Africa and five other southern African countries. Health Secretary Sajid Javid said there were concerns the new variant "may be more transmissible" than the dominant delta strain, and "the vaccines that we currently have may be less effective" against it.

Hong Kong HSI tumbles sharply today in reaction to the new variant news. HSI is trading well inside medium-term falling channel from 31183.35 high. Rejection by 55 day EMA also keeps outlook bearish. We're looking at deeper fall to 23681.43 first and then 61.8% projection of 29394.68 to 23681.43 from 26234.93 at 22704.14 next.

NZD/USD accelerates down to 0.68 and below

NZD/USD accelerates down to as low as 0.6816 so far today, on broad based risk aversion. The break of 0.6858 support should firstly confirmed that corrective rise from 0.6804 has completed with three waves up to 0.7217. More importantly, larger down trend form 0.7463 is now ready to resume.

Further fall is now expected as long as 0.6965 minor resistance holds. Break of 0.6804 will target 38.2% retracement of 38.2% retracement of 0.5467 to 0.7463 at 0.6731 next. We'd tentatively expect strong support from there to complete the fall from 0.7463. Hence, focus will be on bottoming signal as NZD/USD approaches 0.6731.

RBNZ Hawkesby: We need to continue this process of removing stimulus

RBNZ Assistant Governor Christian Hawkesby said in a Bloomberg TV interview, "in New Zealand we've had a very resilient economy, we've got core inflation running near the top of our 1-3% target range, we've got an employment market that's through what we think it maximum sustainable employment."

He said, "so we're getting pretty clear signals that we need to continue this process of removing stimulus and getting interest rates back up towards neutral."

"Inflation expectations are going to be absolutely key for us. There are things that could make us go faster, and I think inflation expectations is one, he said. "Five- to 10-year inflation expectations are very well anchored. Short-term inflation expectations have lifted with headline, but lifted in a way that we would anticipate, so I think that's a really key thing to watch."

"On the upside, the risks are that we've had a very strong economy, a big change in the starting point, inflation expectations, there's a risk that they lift," he said. "But on the other side, interest rates have moved a long way here in New Zealand, mortgage rates are nearly 2% up from their lows in January, and ahead of us we're going to have to navigate having Covid in our community."

Australia retail sales rose 3.9% mom in Oct, still short of pre-delta level

Australia retail sales rose 4.9% mom in October, above expectation of 2.5% mom. That's the strongest rise since Victoria's first lockdown bounce back in November 2020, with retail turnover rising to its highest level since June 2021.

"Retail performance continues to be tied to state lockdowns as this month's recovery was driven by the end of lockdowns in New South Wales, Victoria and the Australian Capital Territory," Ben James, Director of Quarterly Economy Wide Statistics said.

"With lockdown ending on October 11, New South Wales sales rose 13.3 per cent returning to the levels seen in the months immediately prior to the Delta outbreak, while Victoria and the Australian Capital Territory remain below pre-Delta levels."

"Although sales have bounced back strongly following the end of lockdowns, it is important to note that overall retail turnover has not yet reached the level of May 2021, the month prior to the Delta outbreak."

Looking ahead

Swiss will release Q3 GDP in European session while Eurozone will release M3 money supply.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 153.38; (P) 153.73; (R1) 154.03; More...

GBP/JPY is staying in range above 152.35 and intraday bias remains neutral first. With 154.70 resistance intact, further decline is expected . On the downside, break of 152.35 will resume the decline from 158.19 to 148.93 key support next. On the upside, however, break of 154.70 will turn bias back to the upside for retesting 158.19 high instead.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Further rally is still expected as long as 148.93 support holds. However, firm break of 148.93 will argue that the medium term trend has reversed and bring deeper fall back to 142.71 resistance turned support first.

Economic Indicators Update

NZD/USD accelerates down to as low as 0.6816 so far today, on broad based risk aversion. The break of 0.6858 support should firstly confirmed that corrective rise from 0.6804 has completed with three waves up to 0.7217. More importantly, larger down trend form 0.7463 is now ready to resume.

Further fall is now expected as long as 0.6965 minor resistance holds. Break of 0.6804 will target 38.2% retracement of 38.2% retracement of 0.5467 to 0.7463 at 0.6731 next. We'd tentatively expect strong support from there to complete the fall from 0.7463. Hence, focus will be on bottoming signal as NZD/USD approaches 0.6731.