The U.S. Dollar remains in tight ranges as the globe continues to gauge the effects of Omicron in Q4.
Overview
Equity markets were crushed yesterday as the strong belief that central banks are going to be tightening up on their quantitative easing programs and interest rates because of inflationary pressures caused treasury yields to spike. In some cases, yields went up to the point of turning positive after being negative for a long time like with the German 10-year bond. We shall see if earnings from major companies can revive stock exchanges.
Meanwhile, oil prices climbed to their highest level since 2014 following the International Energy Agency’s (IEA) assessment that energy demand is more resilient than expected while coping with Omicron and its impact. We shall see if this piece of news aids the buck along with the fact that the People’s Bank of China has indeed pledged to use more monetary measures to help the economy trailblaze through various problems, in particular, credit stress as real-estate plummets.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro has lost some of its early-year gains as markets figure out how the European Central Bank will act this year. Germany’s economy is a guiding light for a lot of the progress made while the continent recovers, and thus far inflationary figures are meeting expectations. Consumer Price Index figures for the year showed an annualized average of 5.3% and yields for long-term bonds have gone positive after being negative for years. The Pandemic Emergency Purchase Program (PEPP) is scheduled to end fully in March.
GBP
Sterling remains in familiar ranges with the potential for a big jump following surprising inflationary numbers. CPI in the U.K. surged to its highest rates since 1992 at 5.4%. We shall see if indeed this makes it so that the Bank of England is willing to hike as soon as they meet next month on February 3rd.
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