Daily Market Update

U.S. Dollar steady with new COVID variant

November 29, 2021

The U.S. Dollar is being pulled in mixed directions as the U.S. markets go back into full throttle following the Thanksgiving holiday and weekend.

Overview

A scared globe on Friday saw a decline in equities as headlines announced the finding of a new COVID variant that was spreading from South Africa and was seeing flare-ups elsewhere. Nevertheless, there is a sense of relief in today’s mood as Sunday programming and other news explained the Omicron variant was “mild” and likely not to force major lockdowns or inactivity. We shall see the effect of Omicron on the economic outlook, but it seems like it may be another incentive for stronger vaccination efforts and boosters.Meanwhile, the buck is starting to come down from its best levels since Summer last year. News that propelled its rise such as the infrastructure bill and the Fed’s continuity has faded in impact and all eyes will be on the reaction by nations as they gauge Omicron. OPEC+ countries will meet on Wednesday and today we will see if any comments from Powell in a speech in New York cause concern. President Biden will speak at 11:25 AM.

 

What to Watch Today…

  • No major economic events scheduled for today

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EUR

The Euro has been climbing since Friday as the risk of the Omicron variant deviated focus from the negative items the Euro-zone is coping with. Christine Lagarde’s promise to maintain an accommodative environment does not seem so dovish anymore, especially if there are countries that decide to close borders or make other restrictions. The overall sense in markets seems to be of caution until more on the medical front is clear, so expect whipsaw markets and potential for strong FX movement.

 

GBP

The pound remains in familiar ranges while this situation is figured out. Prime Minister Boris Johnson already announced bans on incoming flights from selected Sub-Saharan countries. Expect more developments this week as we face this new challenge, which could end up being just a small bump on the road to not only recovery but progress in ending the pandemic.

 

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