The U.S. Dollar is moving in tight ranges as the first week of 2022 goes on with markets deciphering what Omicron may or may not bring our way.
Overview
The American situation has seen people get vaccinated if they had not and boosters are being provided to those wanting reinforcement.Meanwhile, the virus continues to spread widely, causing problems particularly in Europe, where labor in Germany is seeing more jobless claims and Spain remains with growth in decline. It is true that the medical experts believe Omicron is milder on the body, which is why in the mist of trouble Germany still decided to loosen requirements for incoming travel from South Africa and the U.K.In other areas of the world, such as in Hong Kong, flights continue being cancelled and social safety measures have been put in place, again. Clearly we are going to experience a slowdown as we get Q1 started, but the hope is that we start seeing less concern and impact as Omicron fades. While it seems to be affecting basically everyone, we may be closer to herd immunity. In commodity-based news, OPEC+ met yesterday and members agreed to restart previously halted production as they are satisfied with oil demand holding up in this pandemic recovery.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The shared currency reversed some losses based on hawkish commentary from the European Central Bank governing council Martins Kazaks who explained that no one should be “misguided” as to the intentions of the bank.
Kazaks went on to say that if indeed inflationary growth remains strong, despite ECB’s belief that it will not, officials are more than ready to act and increase interest rates if needed. The comments follow a mixed set of data from Euro-zone countries that are struggling to contain infection but reports that the symptoms are mild, and people are recovering at home. Euro resurgence would not be a surprise if the trend continues.
GBP
Sterling climbed a bit overnight based on news that no new restrictions will be set in the U.K. to try fighting Omicron, leading bulls to believe that Pound, as well as economic strengthening, will not be constrained. There could be some significant flows around 2 PM when the FOMC Minutes from the last Fed meeting are released.
Surprisingly, ADP Employment numbers for December out of the U.S. earlier, which came out double the expectation at 807K jobs added vs. an expected 410K, improved currencies across the board. We shall monitor the Minutes and see if they reveal anything exciting or missed from last time. The Fed decided to tighten up its monetary policy during that time.
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