Market Analysis

The US dollar losing streak continues throughout the early part of Tuesday’s session

FOREX

The US dollar losing streak started on Friday and is carrying on through the early part of Tuesday’s session, following the emergence of the Omicron variant which has climbed to the top of investors’ concerns. This sentiment has been compounded by a statement from the Chair of the Federal Reserve, Jerome Powell, who on Monday alerted to the potential risks posed by the new variant of the virus to economic activity and employment. Such comments are likely to exacerbate the shift to risk aversion observed in the markets since the end of last week, potentially throwing a spanner into the works of investors’ expectations, who had been pricing-in a tightening of policies by the American central bank over the next few months. Until there is more clarity over the real risk posed by the new variant of the virus and the efficacy of the existing vaccines against it, the US dollar may lose some support, as uncertainty returns over the timing of monetary policy tightening measures by the Fed.

Ricardo Evangelista – Senior analyst, ActivTrades

Source: ActivTrader

 

OIL

WTI is falling during early Tuesday trading as worries over the efficacy of existing vaccines against the new Omicron variant cast a cloud over investor sentiment and the prospect of growth for economic activity, and therefore for oil demand in the months ahead. This sentiment was compounded by declarations from the pharmaceutical Moderna CEO, who on Monday told the Financial Times that the existing vaccines probably won’t be as effective against the new variant as they have been against the Delta variant.

Ricardo Evangelista – Senior analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 

Share markets slid significantly lower on both sides of the Atlantic on Tuesday, offsetting reassuring data from China overnight, as a risk-off trading stance prevails amid rising global uncertainty. Investors remained concerned about both the efficiency of existing vaccines against the new Omicron strain as well as about the significant economic risk it poses. This new variant is putting central banks in a difficult situation as they will now be torn between taking hawkish measures to tackle rising inflation, and keeping the extremely dovish policies in place in order to sustain growth with the economic recovery now threatened by this strain. This uncertainty is being reflected on most indices after investors decided to significantly reduce their exposure to risk assets, which wiped trillions of dollars off stock markets in just a few days. Of course, the prospect of new restrictions before Christmas puts a lot of pressure on energy and travel & leisure stocks, who are among today’s worst performers. However, the trading mood may change this week as investors still wait for key data with the EU CPI and appearances of Jerome Powell and Janet Yellen before the Senate Banking Committee due later today, prior to this Friday’s US NFP release.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

 

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