IFX Market Report: Thursday 30th December 2021

Sterling and Euro advanced against the Dollar on Wednesday as falling US Treasury Yields weighed heavy on the Greenback. The US Dollar Index (DXY) dropped by its most in a week yesterday as it closed around 95.88, not far off the monthly low. Also hindering the safe-haven Dollar yesterday was the markets renewed optimism surrounding the new COVID-19 variant Omicron. Investors have become less defensive as the “markets continue to price in finishing Omicron fears thanks to low hospitalisations”.

Research on Omicron so far shows that this variant is less deadly than previous variants, thus some major currencies pairs, such as Cable, have been able to ignore “threats from the South African COVID-19 variant”. The UK Health Security Agency (UKHSA) reported yesterday that “more than 90% of community COVID-19 cases in England are now Omicron”. A further 39,923 Omicron cases were detected in the UK on Wednesday, marking the second-highest daily figure on record. While Omicron is more transmissible than the Delta variant, analysis from the UKHSA confirms that “people with Omicron are significantly less likely to develop severe symptoms”. Their “early results suggest people are 30 to 45% less likely to go to A&E if they are infected with Omicron rather than Delta”. NHS England confirmed that 10,462 people were in hospital in England with COVID-19 as of 8am on 29 December. This figure is up 48% from a week earlier and is the highest figure since the beginning of March this year.

GBPUSD moved closer to the securing 1.35 on Wednesday, opening at 1.3424 and closing at 1.3478.

GBPEUR in contrast recorded a loss yesterday. The pair opened at 1.1894 and closed at 1.1875.

EURUSD made impressive gains in the Wednesday session. The pair started at 1.1286 and closed at 1.1343.

On the data front, today from 13:30, the US will release its weekly Labour report.

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