Market Analysis

The dollar is seeing its gains capped by the attractiveness of the yen and the Swiss franc

FOREX

Uncertainty over the impact of the Omicron variant continues to condition the behaviour of investors, with risk aversion gaining traction in the markets, as illustrated by yesterday’s selloff in US equities. The US dollar, a currency we would have expected to benefit from the Federal Reserve’s increasing hawkishness in a more pronounced way, is seeing its gains capped by the attractiveness of safe havens such as the yen and the Swiss franc. The uncertainty generated by the new variant of the virus, especially as it coincides with the Fed signalling its intention to tighten policies, is translating into an increase in market volatility, reducing risk appetite and creating scope for further yen and franc gains.

Ricardo Evangelista – Senior analyst, ActivTrades

Source: ActivTrader

 

OIL

WTI is rising during early Thursday trading, as traders price-in expectations that OPEC+ will maintain the current level of supply rather than increasing output in January, as had until recently been expected. The emergence of the new virus variant creates uncertainty over the levels of oil demand for the next few months, a scenario which caps the scope for further oil price gains.

Ricardo Evangelista – Senior analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 

Most European indices opened slightly higher on Thursday, alongside US Futures, despite an Asian session without clear direction. While investors are taking some profit on stocks, their appetite for safe havens hasn’t significantly increased over the past few days. As a result, the current trading stance is “wait and see”, especially at a time where the severity of the Omicron variant and vaccine efficiency towards it are being questioned by experts. Even if investors sold the Omicron news, they are closely monitoring the situation awaiting any positive development before buying the dips. That said, markets are likely to stay volatile without any clear direction until there is a significant breakthrough about this new variant and its impact on the economic recovery.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.

All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.