30th December 2021 - Markets calmed by milder symptoms of the Omicron strain.

Market Headlines

Further hopes for milder symptoms from the Omicron strain seeing calmer markets in offshore trade. Equities little changed whilst US yields were firmer although USD selling into the fix saw EUR/USD to highs of 1.1369 and AUD/USD briefly trading to 0.7272.

With no data of note out in early European trade it was predictably quiet with the USD a little better bid. GBP/USD fell to 1.3410, EUR/USD was down to 1.1274 with USD/JPY making 5 week highs at 115.04. AUD/USD was trading quietly around 0.7220 having earlier seen 0.7236 highs.

Into the NY session and US November Wholesale Inventories rose 1.2% MoM, down from 2.3% and below expectations of 1.5%. No reaction to the data with the USD generally weakening in early NY trade.

The second round of US data saw November Pending Home Sales decline by 2.2%, well short of expectations of a 0.8% increase. Again, no reaction to the data with Wall St mixed in early trade.

The USD weakened across the board into the London rate set with the local unit making highs of 0.7272 while NZD/USD moved up to 0.6841.

Majors drifting off their respective highs over the NY afternoon and settling into small ranges ahead of the Sydney open with the local unit steady near 0.7250. US yields higher – 10-year up as much as 7bps to 1.55%

Wall Street little changed into thin afternoon trade with the S&P500 up 0.15%.

Overnight Currency Range

Currency Pair Low High

AUD/USD 0.7213 0.7272

EUR/USD 1.1274 1.1369

GBP/USD 1.3410 1.3499

USD/JPY 114.67 115.04

NZD/USD 0.6789 0.6841

USD/CAD 1.2790 1.2835

USD/CNH 6.3660 6.3746

AUD/JPY 82.80 83.49

AUD/NZD 1.0607 1.0629

AUD Thoughts

Markets are calmer than many were braced for just a few weeks ago with currencies broadly managing to advance against the USD. Again, there is little on the data and event front to excite for the immediate sessions ahead with positioning and end-of-year flows expected to drive any moves for the remainder of this week.

AUD/USD to 0.7272 in offshore trade with another push higher over coming sessions seeing the risk of a short market squeezed out above 0.7300.

Bids expected from 0.7200/0.7220 area.

Event Risk Data Today

UK: December house prices

US: Weekly jobless claims and December Chicago PMI

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