Next week »Omicron variant worries markets

“Early indications show that the Omicron variant may be more transmissible than the Delta variant, and current vaccines may be less effective against it.”

Last week began with concerns about inflation and fears that the Fed would collapse faster than Powell had led markets to believe at the last FOMC meeting. The week ended with the discovery of a new variant of the coronavirus (Omicron) that sent markets into free fall. At the time of writing, there are still many unknowns and the markets remain apprehensive. We will have additional information this week on interest rate expectations, as witnessed by Powell and Yellen before the Senate Banking Committee. By the way, Powell was re-elected as Fed chairman last week. In addition, several countries have released oil from their reserves. With the oil surplus and fears of lack of demand, OPEC + will be called in to find out if it should reduce supply! Also, as December approaches, check out the month-end data and the US Non-Farm Wages Report on Friday.

The new variant of the coronavirus (called Omicron) scares the markets! The Omicron variant was first discovered in Hong Kong via South Africa last week. As a result, the UK, Singapore, EU countries, Canada and the US have all stopped flights there. However, more cases of the variant are discovered every hour. The Omicron variant has also recently appeared in Belgium. How is this variant of the virus different? I’m not a virologist, but “the variant has an unusually high number of mutations,” according to UK Health Secretary Sajid Javid. In addition, he said that “early indications show that this variant may be more transmissible than the Delta variant, and current vaccines may be less effective against it.” Markets will be on the lookout for headlines this weekend to see:

  • How many more cases will be identified?
  • How transmissible is this variant compared to the Delta variant?
  • Are current vaccines really less effective against the Omicron variant?
  • Pfizer has previously said that they can produce a vaccine to combat the Omicron variant in about 100 days. However, so far this does not seem sufficient to satisfy the markets. This story will be making headlines all this week!

    What does the Omicron variant mean for monetary policy? The ECB to déjà été sur ses talons en minimisant toute possibilité de hausse des taux in 2022 and in suggesting the possibility of davantage d’achats d’obligations au-delà de mars 2022. The RBA a également essayé de réduire les attentes en matière de interest rate. However, the RBNZ, BOE, BOC and Fed are all in decrease / increase mode. What is happening now? Will central banks be forced to postpone future rate hikes due to the coronavirus? Or will inflation be too high, so central banks will have to increase? Keep an eye out for the clues this week.

    One of the first places to look will be testimony Tuesday from Fed Chairman Powell and Treasury Secretary Janet Yellen before the Senate Banking Committee. Powell has just been re-elected. Will you try to establish a program for the next few years? Can be. But more importantly, markets will be watching what they think about inflation and its likelihood of affecting the reduction in bond purchases during the first half of 2022. Will the reduction increase like Bullard, Daly, Waller, Bostic and Did Clarida hint at it? Or will this new variant kill the plans and force the Fed to keep cutting “as is” until the coronavirus situation is under control? Remember, the United States just adopted a giant stimulus package, which will increase inflation. Yellen will be forced to defend this decision.

    With the increase in coronavirus cases in Europe, new social restrictions and even blockades have been put in place again. (With the sudden increase in cases, one must consider that these may be due to the Omicron variant.) With fears about the new virus, expectations for demand for oil have been drastically lowered. That, coupled with the release of oil from reserves in China, Japan, India, South Korea, the UK and the US, will leave OPEC + with a big decision to make at their meeting on Thursday. Currently, OPEC + is increasing supply at a rate of 400,000 bpd. Will these new variables from your last meeting cause members to halt supply increases until the coronavirus situation is resolved?

    End of month means end of month data. And while we’ve already had plenty of releases ahead of time for the US Due to the Thanksgiving holiday, the markets will focus on the EU’s November CPI data and China PMI data. It is also the beginning of the month, and while the markets are not as calm as focused on the employment figures at the moment, they will be looking at the average hourly earnings component of the nonfarm payroll data to ensure that wages rise with inflation. Some of the most important economic data that will be released this week are the following:

    Sunday – November 28, 2021

    EU: ECB’s Panetta speech
    Japan: Retail Sales (OCT)
    Australia: Commercial Inventories (Q3)
    Japan: Speech by Kuroda, governor of the BoJ

    Monday – November 29, 2021

    United Kingdom: BOE Consumer Credit (OCT)
    UK: Mortgages (OCT)
    EU: economic sentiment (NOV)
    EU: Final Consumer Confidence (NOC)
    EU: consumer inflation expectations (NOV)
    Germany: CPI Prel (NOV)
    Canada: PPI Final (OCT)
    United States: Pending Home Sales (OCT)
    Japan: Unemployment rate (TCO)
    Japan: Industrial Production Prel (OCT)
    New Zealand: ANZ Business Confidence (NOV)
    Australia – Building Permit (OCT)
    China: NBS Manufacturing PMI (NOV)
    China: Non-Manufacturing PMI (NOV)

    Tuesday – November 30, 2021

    Japan: Start of construction (OCT)
    EU: Flash IPC (NOV)
    Canada: GDP growth rate (third quarter)
    United States: Fed Chairman Powell and Treasury Secretary Yellen testify before the Senate Banking Committee
    United States: S&P Case-Schiller Home Price (SEP)
    United States: Chicago PMI (November)
    United States: CB Consumer Confidence (NOV)
    Global: Final Manufacturing PMI (NOV)
    Australia: Group Ai Manufacturing Index (NOV)
    New Zealand – Building Permit (OCT)
    Australia: GDP growth rate (third quarter)
    China: Caixin Manufacturing PMI (NOV)

    Wednesday – December 1, 2021

    United States: ADP Job Change (NOV)
    Canada: Building Permit (PTO)
    United States: ISM Manufacturing PMI (NOV)
    United States: Construction Expenses (NOV)
    Crude stocks
    OPEC + meeting
    Australia: Trade Balance (OCT)
    Australia: Home Loans (OCT)
    Australia: Final Retail Sales (OCT)
    Japan: Consumer Confidence (NOV)

    Thursday – December 2, 2021

    EU: Unemployment rate (PTU)
    EU: IPP (PTOM)
    United States: Weekly Unemployment Claims
    China: Caixin Services PMI (NOV)

    Friday – December 3, 2021

    Mondial: Services PMI Final (NOV)
    EU: Retail Sales (OCT)
    Canada: job change (NOV)
    United States: Non-Farm Payrolls (NOV)
    United States: Factory Orders (OCT)
    United States: ISM Non-Manufacturing PMI (NOV)


    Chart of the Week: Daily WTI Crude Oil

    Source: Tradingview, Stone X

    WTI crude oil has been sold aggressively since Nov. 10, when the price was near annual highs of 85.15. As the increase in the number of coronavirus cases began to increase aggressively in Europe, concerns about a lack of demand for oil began to creep into markets. Additionally, US President Joe Biden has begun working on telephones for other countries to embark on releasing oil from their reserves. On November 19, the price moved to support the lower trend line of the up-sloping channel (red), which has been the commodity in since April 2020. WTI rallied from there, but it didn’t last just 4 days. skillful. Friday the oil price WTI broke below the bottom line of the uptrend, horizontal support and Fibonacci retracements of 38.2%, 50% and 61.8% from the lows of August 24 to the highs of October 25 . The price finally closed at 68.70, a 12.64% decline for the DAY! There is a band of support at the lows, dating back to the first half of 2018, as well as support at the lows on September 1 at 67.29. The bottom of the support area is near 66.50. Resistance is hard to find here – the upper horizontal levels are at 69.75, 73.19, and 75.95.

    By the way, one more thing to watch this weekend: Black Friday and Cyber ​​Monday sales numbers!

    Next week will probably be extremely volatile! Not only will we have the usual end-of-month feeds, but we will add employment data (from the US and Canada), testimonials from Powell and Yellen, and a new variant of the coronavirus, and this week could be explosive. !

    However, remember that as long as you manage your risk, you can trade any market!

    By Joe Perry, » Official site

    Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or solicitation regarding the purchase or sale of currency exchange contracts or CFDs. Although the information contained in this document has been taken from sources considered reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may result from the fact that someone trusts such information.

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