The safe-haven currencies like the dollar and the yen are benefitting from risk aversion
Asian stocks tumbled on Friday amid a global sell-off triggered by growing concerns over a coronavirus variant discovered in South Africa, with travel shares leading losses in the region. MSCI’s index of Asia shares outside Japan shed 2%, its sharpest drop in three months, while Japan’s Nikkei 225 skidded nearly 3%. US stock index futures were also down ahead of a shortened holiday session.
Following suit, European equities plunged on Friday, with the pan-European Stoxx 600 tumbling over 2.5% in early trade. Investors are worried about both new Covid restrictions in the region and a new variant of the virus which reportedly has more than 30 mutations. Against this backdrop, the WHO is holding a special meeting today.
In currencies, the safe-haven dollar and yen are benefitting from risk aversion while commodity currencies lead the losses. The AUDUSD pair dipped to fresh multi-month lows and was last seen approaching the 0.7100 figure while NZDUSD visited the 0.6800 figure for the first time since mid-August. An extra pressure comes from the oil market where Brent crude slipped to the 100-DMA for the first time since September.
Meanwhile, the safe-haven gold rallied above the 100- and 200-DMAs that had been capping gains since the start of the week. The precious metal exceeded the $1,800 figure but struggles to extend the rally as the surging dollar weighs. Despite the recent bounce, the bullion looks set to finish the week with solid losses.