IFX Market Report: Tuesday 30th November 2021

The new COVID-19 Omicron variant forced an uncertain mood over markets on Monday, allowing the safe-haven US Dollar to gain upside against both Sterling and the Euro. Sterling made losses against both the Euro and Dollar yesterday as fears grow over the Omicron variant and the potential hindrance it may prove to be to the economy. The World Health Organization (WHO) has stressed the potential dangers of the new variant, noting that it “has an unprecedented number of spike mutations, some of which are concerning for their potential impact on the trajectory of the pandemic”. With masks becoming mandatory again and PCR tests needed for travel, the UK government is also offering COVID-19 booster jabs to all over-18’s in an effort stop a new wave of infections. How the UK manages the new variant will likely give direction to Sterling’s performance. If more restrictions must be put in place or another lockdown enforced, Sterling will almost definitely struggle.

The Greenback’s strength on Monday forced Cable into the 1.32 range by the close of the session. GBPUSD opened at 1.3339 and closed at 1.3290

GBPEUR also made a loss on Monday. The pair started at 1.1828 and edged closer to the 1.1800 handle towards the end of the day, closing finally at 1.1803.

After a spark of optimism on Friday, The Single Currency struggled again at the start of this week, with EURUSD back to “well south of the 1.1300 mark”. EURUSD reversed two consecutive daily advances on Monday as the pair returned to the 1.1260 region. The pair started the session at 1.1276 and closed at 1.1261.

On the data front, November’s German Unemployment Rate for was released at 08:55, printing a figure of -34K. German Unemployment Rate came in as forecasted at 5.3%. At 10:00 the Eurozone will release its Flash Core Inflation Rate for November. Then at 15:00, the US will publish its latest CB Consumer Confidence, followed up by a testimony from Fed Chair Jay Powell. US Treasury Secretary Janet Yellen will also be speaking, followed by Fed members John Williams and Richard Clarida.

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