Here’s what you need to know on Monday, November 29:
Friday’s intense flight to safety triggered a sharp drop in US Treasury bond yields and caused heavy losses to global stock indexes. The greenback weakened against safe haven currencies such as CHF and JPY, but outperformed high beta currencies. Despite worrying news about the new variant of the Omicron coronavirus, the mood in the market appears to have improved slightly on Monday morning. Investors are awaiting the German inflation report and Eurozone corporate sentiment data, but risk perception will remain the main driver of the market at the start of the week.
Reflecting the risk-averse market environment, the S&P 500 Index fell more than 2% on Friday, the yield on 10-year US Treasury bonds fell 9.4% and the US dollar index fell by 0.75%. US stock index futures are up 0.4% to 1% in the first European session on Monday. Markets are trying to determine whether the Fed will be forced to take a cautious stance on tightening policy in the face of a potential economic slowdown.
Although the omicron virus has yet to be detected in the United States, Dr Anthony Fauci, the country’s top infectious disease physician and chief medical adviser to the president, said on Sunday that it was inevitable that the variant appears in the United States.
Meanwhile, vaccine producers are testing the effectiveness of current vaccines against the new variant, but they are not expected to report any results for the next two weeks or so. Pfizer and Moderna both noted that it would take them around 100 days to adjust the vaccine if necessary.
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EUR / USD climbed above 1.1300 but lost its bullish momentum at the start of the new week. The pair is currently trading in negative territory around 1.1280.
USD / JPY The pair lost over 200 pips on Friday and opened with a small bullish gap on Monday. The pair remain at a touching distance of 113.00.
GBP / USD struggled to gain traction heading into the weekend as investors reassess the outlook for Bank of England rate hikes. The parity remains in a phase of consolidation above 1.3300 to start the week.
AUD / USD and NZD / USD both fell sharply on Friday. Although these pairs saw a rebound on Monday, they remain sensitive to changes in sentiment.
Gold capitalized on falling US T bond yields during US trading hours, but erased much of its daily gains before ending the week around $ 1,790. The XAU / USD is climbing towards $ 1,800 in the early hours of trading in the European session.
The worsening outlook for energy demand amid renewed concerns over the new variant of the coronavirus causing lockdowns and restrictions caused oil prices fall sharply. West Texas Intermediate per barrel fell more than 12% on Friday and was last seen up 5% to $ 71.50. The commodity-sensitive CAD struggled to find demand and USD / CAD hit 1.2800 for the first time since the end of September. The pair is currently moving lower towards the midpoint of 1.2700.
Crypto-currencies: Bitcoin fell below $ 54,000 on Sunday, but reversed direction and started advancing towards $ 60,000. Ethereum is trading in positive territory above $ 4,300 after testing $ 4,000 over the weekend.