The U.S. Dollar is trading in tight ranges against its major peers but is stronger against commodity-based tender, particularly Antipodean and Asian currencies.
Overview
Omicron’s effects have varied from region to region despite reports that the variant is not as deadly as previous versions. Lockdowns and mandates differ from country to country as some scenarios, like the Australian Open tennis tournament, are looking similar to 2020.Indeed, a bit of fear seems to be gripping markets as equity exchanges decline also based on the fact that the Federal Reserve seems committed to tightening monetary policy. We shall see if there are indeed interest rate hikes on the horizon, but per Fed Minutes, our biggest takeaway is that inflationary growth and other economic conditions will need to be met before officials pull the trigger.
One thing for sure is that the easy-money ear may be over and stock exchanges will need to derive excitement from other factors than dovishness. There will be a few data points of interest released at 10 AM measuring Factory Orders and Durable Goods Orders for November.
What to Watch Today…
- Factory Orders 10 AM
- Durable Goods Orders 10 AM
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EUR
The Euro did not move tremendously after the Fed as the Omicron variant has affected the economic flow of the Ancient Continent. Germany produced decent economic indicators, unlike any other nation, which seems to be regressing a bit. Factory Orders and Purchasing Managers Index figures have been better than expected in the largest economy of the union, but low vaccination rates and high infection rates characterize the countries to east and south.
Additionally, we will need to monitor the political theater of Italy, where Prime Minister Mario Draghi is making investors nervous as he is reportedly seeking to leave his Prime Minister position in order to go after the role of President. In Italy, the Prime Minister is appointed by the President of the Republic.
CAD
The “Loonie” has been trading under pressure all year, thus far. It has fallen almost 1.0% already based on Omicron concerns as well the determination established in the FOMC Minutes. The Bank of Canada was one to tighten faster than any other advanced nation through the pandemic, citing the need for the economy to grow without the crutch of stimulus.
Nevertheless, the global slowdown has gotten to Canada and although there was control of the condition and infection before, Delta and Omicron brought on issues with cross-border trade and travel that dragged things down. We shall see if things turn around as oil markets are expected to benefit our northern neighbor. It may be a good time to hedge.
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