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Currencies Revert as Markets Reassess Omicron Risk

FOREX
  • Growth proxies and commodity-tied FX are trading higher ahead of the NY open, with markets reassessing the overarching risks of the new Omicron variant that had sent markets spiraling on Friday. Equities have similarly bounced, with US futures indicating a higher open of 0.7% or so. While risks surrounding the new Omicron variant remain, markets are reassessing the impact on global economies, with renewed lockdowns across the likes of the UK and US looking unlikely.
  • Expected vaccine protection also received a boost, with Moderna announcing they expect a new variant-targeting jab to be ready for use by early next year.
  • The moves have favoured CAD and AUD, while haven FX has weakened. This puts AUD/JPY back above 81.00, but still well short of the Friday highs at 83.02.
  • EUR/USD trades softer, working against much of Friday's rally as markets re-price the US curve, reversing some of last week's volatility that had priced out near-term Fed rate rises through 2022.
  • Focus turns to central bank speak, with a number of Fed representatives on the docket including Powell, Williams and Bowman. Although the speech topics aren't directly policy-related, markets remain on watch for clues on policy trajectory in the face of the variant.
Energy BulletsCommodities
Energy BulletsCommodities

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