Nerves will calm down but there are still concerns

  • Feeling better, Biden’s fiscal agenda is supported by signs that he is not dead.
  • Dollar is back, Sterling has recovered in a relatively quiet FX market
  • Stock and oil prices are set back, and the Turkish lira is making a staggering return

 

Feelings of insecurity calm down.

Global markets began the week slowly, with the rapid spread of the Omicron lightning strike amid fears that the central bank could devalue and slow down economic growth. Due to the holiday season, thin-walled sales are likely to accelerate sales.

 

The good news is that the bleeding has stopped. Asian and European stocks have rebounded, Wall Street futures are looking good ahead today, and oil prices have stabilized with most commodities. It is worth noting that the S&P 500 has revived its 100-day moving average.

Although there are some indications that President Biden’s fiscal agenda is not dead, it is unclear what stabilized the market. Senator Manchini’s refusal to support the social package has been interpreted as a fatal blow to the Democrats’ spending program, but negotiations are likely to continue next year.

Dollars are cold, sterling is breathing

The FX platform was surprisingly stable given the high volatility elsewhere, with most major currency pairs trading in a clear direction. The dollar / yen is a symbol of this relative stability, thanks to both the green back and the yen’s defensive qualities.

Sterling, on the other hand, was caught in the middle of a hurricane in the midst of a dramatic rise in the Bank of England and a shift in the demand for food. The prospect of strong sanctions against Omiron before Christmas is also hidden behind the scenes, preventing the pound from returning to normal.

Looking ahead, next year’s key themes for the currency market will be how to develop central bank policies and risk aversion. This is a recipe for high volatility as FX traders have to deal with inflation surprises and any shocks in the markets.

For the time being, the accident was caused by a flashlight in a very illegal holiday market.

Turkish lira fights

The Turkish lira has been embroiled in controversy recently, with the central bank depreciating as inflation plummeted, with local officials saying they had received enough yesterday. The government has said it will protect lira depositors by compensating them for FX losses beyond the interest rates offered by banks.

Of course, there are many questions about whether this program will exacerbate inflation and whether it will be funded, indicating a high risk of Turkish debt. But he did amazing things until Lira’s fall was over, and the money recovered 15% of its value, leaving only the psychological symbol of short stature.

The economic calendar is the low key. A few months later, Loni, who traded close to oil prices, turned his attention to Canadian retail sales. Overall, markets will continue to provide clues to any news on the Omicron, Central Bank and US fiscal agenda.

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