Forex news from the European trading session - 30 November 2021
Headlines:
- Moderna CEO: There will be a material drop in vaccine effectiveness against omicron
- Eurozone November preliminary CPI +4.9% vs +4.5% y/y expected
- Money markets push back on Fed rate hike expectations
- Germany November unemployment change -34k vs -20k expected
- Italy Q3 final GDP +2.6% vs +2.6% q/q prelim
- France November preliminary HICP +3.4% vs +3.2% y/y prior
- France Q3 final GDP +3.0% vs +3.0% q/q prelim
- Japan total spending for the next fiscal year to hit a record high
- ECB's de Guindos: Confident that bond buying will continue throughout 2022
Markets:
- EUR leads, CAD lags on the day
- European equities lower; S&P 500 futures down 0.8%
- US 10-year yields down 8 bps to 1.45%
- Gold up 0.3% to $1,789.90
- WTI down 2.3% to $68.03
- Bitcoin down 0.5% to $58,011
The handover from Asia to Europe was where things kicked into gear as a calmer tone in the market quickly turned on its head after Moderna CEO, Stéphane Bancel, warned of the current set of vaccines' efficacy against the omicron variant.
That was enough to pile added pressure on risk trades from the Friday drop, as yesterday's lighter mood is quickly put in the rearview mirror.
European and US futures fell heavily but the stronger reaction came from the bond market as Treasury yields fell sharply and things still aren't looking pretty now.
In Europe, regional indices fell by around 1.5% to 2.0% at the lows before recovering some losses to roughly around 1% declines at the moment. US futures also fell by over 1% at the lows but S&P 500 futures have trimmed that a little to a 0.8% drop.
10-year Treasury yields fell by close to 11 bps at the lows but amid a technical standoff just below 1.42%, yields are now back up a little to 1.45% but still down 8 bps.
The heavy mood had a more straightforward impact on FX with USD/JPY tumbling from 113.60 to 112.70 before keeping closer to around 113.00 currently.
USD/CHF also fell by 0.5% to 0.9170-80 levels now with EUR/USD benefiting from a pushback on Fed rate hike pricing as the pair climbed from 1.1300 to 1.1370.
Commodity currencies came under strong pressure early on with AUD/USD and NZD/USD both making fresh lows for the year.
The former dropped 0.7145 to 0.7095 before finding some reprieve to around 0.7130 levels now. The latter fell from 0.6825 to 0.6785 as sellers threatened a break below the 0.6800 handle before paring losses to around 0.6810-20 at the moment.
Elsewhere, oil also had a poor showing and is on course for its biggest monthly loss this year. At the lows today, price was down over 3% in a plunge from $70.50 to $66.75 before recovering some poise to keep closer to $68.00 at the moment.
