Omicron virus does not affect economic recovery
Despite concerns about the extremely contagious omicron virus subtype, investors are focusing on the economic recovery from the pandemic and central bank’s plans for stimulus reduction at this time.
In the FX market, the focus today is on dollar/yen, which surged to a new five-year high of 116.33 as risk-on sentiment pressed safe-haven currencies such as the yen. It may be difficult for sellers to reverse the trend. The BOJ will stay the most dovish, so the weak yen may dive further this year.
The euro is still trading lower, and if it breaks below $1.1230, it could meet the 16-month low of $1.1185. Euro/pound is hovering near an almost two-year low of 0.8354 as the ECB is lagging behind the BoE, which has surprisingly hiked its interest rates last month.
In stock markets, US futures are suggesting another soft positive open for Wall Street today.
FOMC minutes and NFP on cards this week
Markets will probably be back in full gear later this week as investors are eagerly waiting for the minutes of the December FOMC released on Wednesday and the latest nonfarm payrolls report due on Friday, the markets. Nonfarm payrolls are expected to have increased by 400k in December, compared to 210k in November, which may be amended. The unemployment rate is expected to fall by 0.1% to 4.1%. The ISM manufacturing and non-manufacturing PMIs are also coming out.
In central bank news, there are now some people who might be suitable candidates for the Fed Board of Governors to keep in mind. A lot of people say that President Biden is going to nominate Philip Jefferson, who served the Fed twice before, to fill one of the empty seats on the Board of Directors.
OPEC+ meeting is expected
So far, OPEC+ is expected to keep up with its planned production increases today. Oil traders will be very interested in this. If that’s the case, the market reaction could be very limited, with oil prices moving around $76.46/per barrel.
Gold is trading around $1,800/per ounce after a sharp negative day on Monday. Aussie/dollar is battling with the 0.7180 support level and the 20- and 40-day simple moving averages (SMAs), while kiwi/dollar is falling near 0.6765.
Dollar/loonie is continuing the upside move with weak momentum as Ontario is facing record high infection cases. All schools will move to online learning, and indoor dining, gyms, and movie theatres will be closed, as well.
