Omicron fears abate, risk assets gain

“You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody.” - Alexander Elder

 

 

 

HEADLINES

 

 

 

• Dollar slips as risk-sensitive currencies advance
• Turkish central bank to support FX deposit conversion to lira deposits
• Yields rise as traders look past Omicron
• Gold slips as dollar steadies, equities rally
• U.S. natgas futures gain on soaring global gas prices
• Global stocks buoyed by renewed risk appetite
• USD/CNY to move towards 6.80 in 12M – Danske

 

 

 

FOREX

 

 

 

Dollar slips as risk-sensitive currencies advance

 

The U.S. dollar dipped slightly on Tuesday as improving risk sentiment boosted riskier currencies such as the Australian dollar and the British pound.

Risk appetite took a blow on Monday after U.S. Senator Joe Manchin, a conservative Democrat who is key to President Joe Biden's hopes of passing a $1.75-trillion domestic investment bill - known as Build Back Better - said on Sunday he would not support the package, prompting a sell-off in global markets.

 

Turkish central bank to support FX deposit conversion to lira deposits

 

The Turkish central bank said on Tuesday it has decided to support foreign currency deposit accounts converted to lira deposit accounts in a move to encourage reverse dollarization. Turkey's lira, which hit a series of record lows in recent days, rocketed back in volatile trading on Tuesday after Turkish President Tayyip Erdogan proposed measures to protect local currency savings against such swings.

 

Yields rise as traders look past Omicron

 

Treasury yields were higher on Tuesday as traders focused on optimistic economic conditions despite the rapidly spreading Omicron variant of the coronavirus, and discounted inflation fears at a 20-year bond auction.

The moves marked a reversal of sentiment from Monday, when the yield on the benchmark 10-year note fell as low as 1.353%, the lowest since Dec. 3. In Tuesday afternoon trading the note was up 6.1 basis points at 1.4805 %.

 

 

 

COMMODITIES

 

 

 

Gold slips as dollar steadies, equities rally

 

Gold prices eased on Tuesday as the dollar recovered some lost ground and appetite for riskier assets returned with investors looking past the economic risks posed by the Omicron coronavirus variant.

 

U.S. natgas futures gain on soaring global gas prices

 

U.S. natural gas futures edged up on Tuesday, shrugging off forecasts for milder weather and lower heating demand next week than previously expected, and focusing instead on a sharp rally in European gas futures that could keep U.S. liquefied natural gas exports near record highs.

 

 

 

STOCKS

 

 

 

Global stocks buoyed by renewed risk appetite

 

Wall Street recouped losses on Tuesday after a bruising session the previous day, with oil prices also gaining as investors sought riskier assets despite surging Omicron COVID-19 cases around the world.

U.S. President Joe Biden on Tuesday said he would be taking steps to fight the Omicron variant, by opening federal testing sites in New York City and buying 500 million at-home tests Americans can order online for free.

 

 

 

ANALYSIS

 

 

 

USD/CNY to move towards 6.80 in 12M – Danske

 

“For USD/CNY, we expect the easing of monetary policy alongside rate hikes by the Fed to finally lead to a turning point for the cross. CNY has been trading very strongly in 2021 on the back of a high trade surplus, but we also expect this to come down during 2022 as the US demand for goods is expected to moderate. We expect USD/CNY to move towards 6.80 in 12M from the current level of 6.37.”

 

 

 

CHART

 

 

 

Gold – 4-Hour Candlesticks

Source: GKFX Prime Metatrader 4

XAU/USD has pulled back to the 20 day moving average as well as broken resistance turned support after a rally off the long term support zone at 1750. - Prepared by Trading Writers*

 

 

 

CALENDAR

 

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

 

SOURCE

 

 

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/usd-cny-to-move-towards-680-in-12m-danske-202112211730
https://www.reuters.com/markets/europe/global-markets-wrapup-4-2021-12-21/
https://www.reuters.com/markets/currencies/turkish-central-bank-support-fx-deposit-conversion-lira-deposits-2021-12-21/
https://www.reuters.com/markets/us/yield-curve-steeper-traders-look-past-omicron-2021-12-21/
https://www.reuters.com/markets/europe/gold-slips-into-tight-range-dollar-steadies-omicron-fears-ebb-2021-12-21/
https://www.reuters.com/markets/commodities/us-natgas-futures-edge-up-soaring-global-gas-prices-2021-12-21/