US Open Note – Market sentiment remains tentative ahead of central bank meetings
The dollar is slightly softer on the day despite surging Treasury yields and soaring risk-off sentiment in global markets triggered by the resurgence of Omicron jitters. The driving force behind this pullback is growing doubts that the Omicron outbreak will have a minimal impact on the global economy. In addition, data released just now - a day before the Fed’s decision - showed that producer prices in the United States jumped more than expected in November, fueling concerns about tighter policy just as there are renewed virus risks.
Euro and pound hold firm; safe havens shineAlthough the ECB is expected to stick to the dovish rhetoric at its Thursday meeting, the euro is trading higher in the current session. In addition, the British pound is in the green, with the solid UK jobs report that came out earlier today underpinning the currency’s prospects. Nevertheless, the upside potential is limited as the BoE is anticipated to delay its upcoming rate hike to February 2022 due to the Omicron variant outbreak in the UK.
The Swiss franc is appreciating today, capitalizing on surging risk aversion, while the Japanese yen paired part of its early-session gains. Moreover, the commodity-linked currencies are flat in the current trading session.
Stock markets grapple with Omicron fearsThe outlook for equity markets is relatively mixed on Tuesday. Wall Street is set to open lower today as e-mini futures for the major US indices are taking a hit in premarket trade. More specifically, Nasdaq and S&P 500 futures are down 0.5% and 0.2% respectively, while Dow Jones futures are flat.
On the other hand, major European indices kept a slightly more positive tone but have not yet managed to recover yesterday’s losses.
In individual equity news, Elon Musk has accelerated his disposal of Tesla shares to cover taxes on the exercise of 2.1 million options, according to regulatory filings.
Gold dips; oil steadiesGold is trading lower today despite the prevailing risk-off sentiment and the weaker dollar, heavily pressured by soaring Treasury yields. Inversely, oil prices bounced back strongly after an initial pullback, amid mixed headlines about the sufficient efficacy of existing vaccines against the Omicron variant.Latest News
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