COVID spread weighing on market's risk appetite
|- Risk-off could be the order of the day as markets follow Friday's sullen mood.
- Covid cases on the rise and threat to global recovery have been marked in forex.
- AUD/JPY bears could get the boost they need towards the weekly support structure.
The start to the week might well be more of the same from `Friday, risk-off, which will bode well for risk-off FX such as short AUD/JPY (more below).
Forex Today: Risk-off to continue leading the way
Acceleration of coronavirus
As per the above article, Friday's markets were risk-off pertaining to investor's concerned for the slower pace of growth and the acceleration of coronavirus cases.
In recent months, a variant of SARS-CoV-2, the virus that causes COVID-19, has been making headlines as it has spread across the world.
The Covid delta variant has exploded in the UK and investors are worried that it could be a blueprint for other nations, such as the US.
Ahead of the lifting of lockdown rules in England from Monday, the UK reported 54,674 new coronavirus cases on Saturday, the biggest one-day increase since January, and 41 new deaths.
The current wave of coronavirus infections could see up to 200,000 new cases a day, Imperial College London epidemiologist Neil Ferguson has warned.
Prof Ferguson told BBC1’s Andrew Marr Show that it was “almost inevitable” that daily infection rates would hit a record 100,000 within a week, and that cases could spike at more than double that figure.
The warnings come despite the UKs vaccination programme.
Besides Asia, where the delta variant has been a dominant risk theme in markets, cases attributed to the delta strain now make up around 20% of newly diagnosed cases in the US.
This is according to White House chief medical advisor Dr. Anthony Fauci.
Fauci warned last week that the delta variant is set to become the dominant strain in the US in a matter of weeks.
“It just exploded in the U.K. It went from a minor variant to now more than 90% of the isolates in the UK.,” Fauci said on NBC’s “TODAY” show.
“Similar to the situation in the UK, the delta variant is currently the greatest threat in the US to our attempt to eliminate Covid-19,” he said.
AUD/JPY technical analysis
As per the prior analysis, AUD/JPY Price Analysis: Bears in control, eye daily extension, the cross is back under pressure and heading towards weekly support structure as per technical analysis below.
Prior analysis, AUD/JPY daily chart
The price is in a bearish trend and given the recent correction that has started to run out of momentum, there are prospects of a continuation to the downside.
Live market update
The above chart illustrates the progress made since the original article on the 15 July.
Bears will eye between the 80.90 and 80.50 weekly target area at this juncture following the prior week's bearish weekly close.
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