Search LOGIN

Omicron lockdown concerns weigh on sentiment

“Do not save what is left after spending but spend what is left after saving.” Warren Buffet

 

 

HEADLINES

 

 

  • Dollar jumps as Omicron spreads amid rate-hike talk
  • Euro zone inflation confirmed at record high in November
  • Pound set for biggest weekly rise in 2 months on BoE surprise
  • Gold gains as omicron, inflation worries burnish safe-haven appeal
  • Oil prices post weekly loss on Omicron uncertainty
  • Dow tumbles more than 500 points to end a volatile week, S&P 500 sheds 1%
  • European Stocks Lower as Central Banks Hit Sentiment
  • AUD/USD: Downside risks for the Aussie have eased in the near-term– MUFG

 

 

FOREX

 

 

Dollar jumps as Omicron spreads amid rate-hike talk

 

The dollar rose on Friday as traders retreated from riskier currencies amid talk of interest rate hikes by central bankers and concerns about the spread of Omicron cases. The euro and British pound fell 0.8% and 0.6%, respectively, after having booked gains the two previous days. The euro stood at $1.1239 and the pound at $1.3236 at 2100 GMT.

 

Euro zone inflation confirmed at record high in November

 

Euro zone inflation surged to its highest rate on record in November, the European Union's statistics office Eurostat confirmed on Friday, with more than half of the increase due to a spike in energy prices. Eurostat said inflation in the 19 countries sharing the euro rose to 4.9%, a year-on-year surge in line with an earlier Eurostat estimate.

 

Pound set for biggest weekly rise in 2 months on BoE surprise

 

The British pound consolidated gains on Friday and was on track to post its biggest weekly rise since October after the Bank of England this week became the first G7 economy to raise interest rates. Against the U.S. dollar, the pound was flat at $1.3325, staying near a more than three-week high at $1.3376 hit in the aftermath of Thursday's BoE rate decision. On the week, the pound was up 0.4%, which would be its biggest weekly gain since mid-October if it ends the day at that level.

The BoE stunned markets on Thursday by raising interest rates by 15 bps to 0.25% sending gilt yields, bank stocks and the British pound shooting higher.

 

 

COMMODITIES

 

 

Gold gains as omicron, inflation worries burnish safe-haven appeal

 

Gold rose above the key $1,800 level on Friday and was set for its first weekly gain in five as worries over the omicron surge and hot inflation drove investors to safe-haven assets. Equities fell across the board, reeling from a hawkish turn by global central banks looking to tame rising price pressures and the economic risk posed by rising COVID-19 cases.

 

Oil prices post weekly loss on Omicron uncertainty

 

Oil prices fell on Friday and were also down on the week as surging cases of the Omicron coronavirus variant raised fears that new restrictions may hit fuel demand. In Denmark, South Africa and Britain, the number of new Omicron cases has been doubling every two days. Danish Prime Minister Mette Frederiksen said on Friday her government would propose new restrictions. In the United States, the rapid spread of the Omicron variant has led some companies to pause plans to get workers back into offices.

 

 

STOCKS

 

 

Dow tumbles more than 500 points to end a volatile week, S&P 500 sheds 1%

 

U.S. stocks came under pressure again in Friday’s volatile session amid worries about tighter monetary policy and the ongoing pandemic, leading to a losing week for the major averages. The Dow Jones Industrial Average dropped 532.20 points, or 1.5%, to 35,365.44. he major averages posted a negative week with the Nasdaq being the biggest loser. The tech-heavy benchmark declined nearly 3%, while the Dow and the S&P 500 slipped 1.7% and 1.9%, respectively.

 

European Stocks Lower as Central Banks Hit Sentiment

 

European stock markets slipped Friday, as markets adjust to a new reality that central banks are tightening monetary policy even in the face of another Covid-induced slowdown. Two of Europe’s biggest central banks took steps to combat surging inflation on Thursday, with the Bank of England raising interest rates for the first time since the pandemic started and the European Central Bank saying it will end its emergency bond-buying program in three months' time. In contrast to the Federal Reserve, however, the ECB will continue to buy bonds at least until the end of next year.

 

 

ANALYSIS

 

 

AUD/USD: Downside risks for the Aussie have eased in the near-term– MUFG

 

“The recent turnaround in fortunes for the AUD has been driven both by positive domestic and external factors. On the external side, the AUD has derived support from the easing back of initial fears over potential disruption to the global economy from the new Omicron variant. Market participants appear to be making the assumption that economic disruption will prove short-lived as the new variant spreads more rapidly and is potentially less severe. At the same time, the AUD has derived support from the recent policy shift in China which has helped to ease concerns over the risk of a sharper slowdown from weakness in the real estate sector.”

“Domestic developments have also been favourable for the AUD. It has been revealed that GDP contracted less than expected in Q3 in response to the lockdowns, and the economy is now bouncing back strongly.

 

 

CHART

 

 

Silver – Daily Candlesticks

Source: GKFX Prime Metatrader 4

XAG/USD is again rebounding off long term support at 22 after forming a hammer pattern at the September 29 low. - 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/aud-usd-downside-risks-for-the-aussie-have-eased-in-the-near-term-mufg-202112171527
https://www.cnbc.com/2021/12/16/stock-futures-inch-higher-following-tech-sector-sell-off-.html
https://www.cnbc.com/2021/12/17/gold-markets-federal-reserve-pandemic-stimulus-tapering.html
https://www.investing.com/news/commodities-news/oil-heads-for-flat-week-on-omicron-uncertainty-2714918
https://www.investing.com/news/stock-market-news/european-stocks-lower---as-central-banks-hit-sentiment-2715274
https://www.investing.com/news/economic-indicators/euro-zone-inflation-confirmed-at-record-high-in-november-2715314
https://www.msn.com/en-gb/money/other/pound-set-for-biggest-weekly-rise-in-2-months-on-boe-surprise/ar-AARUjYH

UNLIMITED ACCESS!

The best way to keep track of your accounts. Get notifications
and access your dashboard any time!

Open a live or demo account, make secure deposits or get latest
market updates for free!