Risk aversion dominates markets ahead of the weekend

The intense flight to safety on Friday is weighing heavily on risk-sensitive currencies and global stock indexes while allowing the greenback to find demand despite falling Treasury bond yields. Reports of the new coronavirus variant, which was detected in South Africa, showing immune evasion and possibly rendering current vaccines ineffective is forcing investors to seek refuge. The economic calendar won’t be featuring any high-tier data releases and market participants will remain focused on risk perception ahead of the weekend.

Japan’s Nikkei 225 Index is down nearly 3%, the UK’s FTSE and Germany’s DAX 30 both look to open around 2% lower than Thursday’s closing levels. Moreover, US stocks futures, which will close early due to the Thanksgiving holiday, are down between 1.6% and 1.3% and the 10-year US Treasury bond yield is falling more than 5%.

EUR/USD registered modest gains on Thursday and continues to edge higher toward 1.1250 on Friday. The shared currency is also attracting demand as a safe haven.

AUD/USD and NZD/USD pairs are both down nearly 1% amid risk aversion. The barrel of West Texas Intermediate (WTI) is down more than 4% amid the worsening energy demand outlook and USD/CAD is trading at its strongest level since late September near 1.2750.

GBP/USD is struggling to gain traction and stays around 1.3300 in the early European session. The UK has announced that it has suspended flights to six African countries.

USD/JPY is posting large losses below mid-114.00s on Friday as the JPY continues to gather strength.

Gold is capitalizing on falling US Treasury bond yields and trading above $1,800 following the steep decline witnessed earlier in the week.

Cryptocurrencies: After rebounding toward $60,000, Bitcoin turned south on Friday and was last seen losing 3% on the day around $57,300. Ethereum, which gained 6% on Thursday, is trading in the negative territory below $4,500.

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