The half-full glass: four big economic events that could go right in 2022

After a year in which many people’s positive hopes were dashed by reality, John Stepek looks forward to 2022 with four scenarios that could go right next year.

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Molten Ventures: invest in digital technology with this venture capitalist

Molten Ventures offers investors access to fast-growing unlisted companies across Europe

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Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities

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Events to Look Out for Next Week

Happy Holidays from everyone at HF Markets. We hope your holidays will be filled with joy and laughter through the New Year.

Omicron increasingly dominates virus developments globally, and while it seems the new variant is less likely to lead to hospitalisations than Delta, there is still concern that a huge spike in the number of those forced into quarantine will hit essential services in coming weeks. Still, on the whole the reaction to the latest wave has been more nuanced and the feel is increasingly that the worst is behind us. That backs expectations that the recovery will be dented, but not derailed, which means central bank policies will only go in one direction next year.There is little this week to distract from cautious merry making, after which attention will turn to assessing current conditions and the outlook for 2022.

Monday – 03 January 2022

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• Holiday – New Year’s Day for UK, Australia, Canada, New Zealand and Japan
• Markit PMIs (EUR, GMT 08:55) – Eurozone’s & Germany’s December Manufacturing PMIs are expected to remain unchanged at 58 and 57.9 respectively.

Tuesday – 04 January 2022

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• Retail Sales & Unemployment (EUR, GMT 07:00 & 08:55) – Expectations  for Germany Retail sales are negative as further decline is seen at -0.5% for November. Unemployment could continue to decline with un employment change at -15K in December.
• OPEC Meeting – OPEC and non-OPEC Ministerial Meeting (ONOMM) planned to decide whether it will add another 400k bpd of production to global supply.
• Markit PMIs (GBP, GMT 09:30) – December’s Services PMIs in UK are expected to steady at 57.6.
• ISM Manufacturing PMI (USD, GMT 15:00) – The ISM index is expected to dip to 60.5 from 61.1 in November, compared to an 18-year high of 64.7 in March, an 11-year low of 41.5 in April of 2020, and an all-time low of 30.3 in June of 1980.

Wednesday – 05 January 2022

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• Composite Markit PMIs (EUR, GMT 08:55-09:00) – Eurozone’s & Germany’s  Composite December PMIs seen unchanged at 53.4 and 50 respectively. Eurozone PMI at 9 month low as covid measures hit the services industry. In Germany the respective PMI actually signal a contraction. Clearly, renewed pressures on tourism and hospitality sectors are dampening the short-term outlook, but be expect this to be a temporary dent, rather than an end to the recovery. The fact that there were some signs of easing constraints in supply chains is also encouraging.
• ADP Employment Change (USD, GMT 13:15) – Employment change is seen spiking to 438k in the number of employed people in December, compared to the 534k reading seen in November.
• FOMC Meeting Minutes (USD, GMT 19:00) – The FOMC minutes should provide further guidance for 2022.

Thursday – 06 January 2022

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• Harmonized Index of Consumer Prices (EUR, GMT 13:00) – The prelim. German HICP inflation for December is anticipated to slow down to 5.6% y/y from 6.0% y/y.
• ISM Services PMI  (USD, GMT 15:00) – A decline from December spike to 69.1 is expected with the data slipping to 67.0.
• ISM Non-Manufacturing PMI (USD, GMT 15:00) – The ISM-NMI index is expected to fall to 66.0 from an all-time high 69.1 in November, and a prior all-time high of 66.7 in October. Producer sentiment has been mixed thus far in December after robust November levels, with a disappointing Philly Fed report despite robust Empire State data.

Friday – 07 January 2022

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• Retail Sales (EUR, GMT 10:00) – Retail Sales should contract to -0.5% m/m in November, leaving the headline at 5.6% y/y. The three months trend rate turned negative however, and with virus restrictions being tightened again in parts of the Eurozone, the risk of further pressure on retailers is rising.
• Non-Farm Payrolls (USD, GMT 13:30) – Expectations are for a 440,000 in December nonfarm payroll, after gains of 210k in November.  The jobless rate should hold steady at 4.2% for a second month, down from 4.6% in October. Average hourly earnings are assumed to rise 0.4%, after gains of 0.3% in November and 0.4% in October, while the y/y wage gain should ease to 4.2% from 4.8% due to a hard comparison. In the last expansion we saw a 3.5% peak for y/y wage gains, in both February and July of 2019, before the pandemic-boost to an 8.0% peak in April of 2020, and the ensuing strength in wage gains that has allowed continued robust y/y increases. We expect a robust payroll trajectory into the end of 2021 thanks to the last two stimulus packages and vaccines.
• Labour Market Data (CAD, GMT 13:30) – The Canada’s employment rose 153.7k in November, much better than expected, following the 31.2k rise in October. The jobless rate dove to 6.0% from 6.7%.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Looking Ahead: 5 Things To Watch For The Pound In 2022

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The half-empty glass: four big economic events that could go wrong in 2022

John Stepek looks forward to 2022 and proposes four disastrous scenarios that may or may not play out, but that are certainly worth bearing in mind. 

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How my stock trading tips fared in 2021

Successful bets have included construction group Morgan Sindall and US housebuilder DR Horton

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How to fight cyber-crime in your small business

There are five key areas for owners of small businesses to focus on when fending off digital attacks.

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Market Update – December 30 – End-of-year trading is not kind to Treasury bulls

End-of-year trading was not kind to Treasury bulls as unwinding of the month’s Omicron inspired haven purchases were unwound. The break of key technicals and very thin liquidity conditions exacerbated the climb in rates.

• The USD (USDIndex 96.37) was supported. US Yields sold off after key technical levels were breached and the 7-year auction was poorly subscribed. The 10-year penetrated the 50-day moving average at 1.526% and the 30-year pierced the 100-day moving average at 1.938%, which saw the yields rise to intraday peaks of 1.5548% and 1.9687%.  following the auction results. The 2-year yield, meanwhile, was fractionally higher at 0.752%.
• Equities -Broader indexes advanced to fresh all-time highs. The USA30 was up 0.25% to 36,488 and the USA500’s rose 0.14% to 4,793 – 70th new high of the year. The USA100 lagged with a -0.10% loss. The GER30 future is up 0.1%, the UK100 future down -0.1%.
• USOil – at 75.80, bouncing within 75-77 area.
• FX markets – Euro and Sterling dropped back against a largely stronger US Dollar. EURUSD is at 1.1315 and Cable at 1.3473. USDJPY breached 115.20.

Today – Germany is already on holiday again tomorrow, the UK extends the weekend through to Monday and volumes are likely to remain low today, although the calendar still has some interesting releases in Europe. Preliminary inflation data for Spain are due, the Swiss Kof indicator will also be released. US Weekly jobless claims highlight.

Biggest FX Mover @ (10:30 GMT) EURUSD (-0.22%) pullback from 1.1398 highs to 1.1314. Fast MAs pointing downwards, RSI flattened though at 42 Stochastick are in OS area while MACD lines decline.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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Dollar Edges Higher Off Range Lows; Jobless claims Due

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BTCUSD, H4 | Bullish Momentum

Type: Bullish BounceKey Levels:Resistance: 51911.11Pivot: 45664.01Support: 44018.65Preferred Case:Price broke out of the descending trendline resistance, signifying a potential bullish momentum. We can expect price to bounce up from the pivot level in line with graphical overlap support, 161.8% Fibonacci extension, 61.8% Fibonacci retracement and 161.8% projection towards 1st Resistance in line with previous swing high and 161.8% Fibonacci projection. Our bullish bias is further supported by the stochastic indicator where the %K line is at the support level.Alternative Scenario:Alternatively, price could push down to the 1st Support level in line with the horizontal support level.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/btcusd-h4-or-bullish-momentum-30thdec"
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USDCAD, H4 | Bearish Dip

Type: Bearish ReversalKey Levels:Resistance: 1.29389Pivot: 1.2846Support: 1.28034Preferred Case:Price is trading in an ascending channel and near pivot level of 1.2846 which is also 38.2% Fibonacci retracement. Price can potentially go to the 1st resistance level of 1.29389 which is also 78.6% Fibonacci retracement and 78.6% Fibonacci projectionAlternative Scenario:Price can potentially dip to the 1st support level of 1.28035 which is also 38.2% Fibonacci retracement and 61.8% Fibonacci projection .

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdcad-h4-or-bearish-dip"
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NZDUSD, H4 | Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 0.68677Pivot: 0.68192Support: 0.67883Preferred Case:Prices are abiding to our bullish trendline and is is on bullish momentum. We see the potential for a bounce from our Pivot at 0.68192 in line with 61.8% Fibonacci retracement towards our 1st resistance at 0.68677 which is an area of Fibonacci confluences. Ichimoku clouds are forecasting strong bullish momentum.Alternative Scenario:Alternatively, prices may dip towards our 1st support at 0.67883 in line with 100% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/nzdusd-h4-or-bullish-continuation"
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USDCAD H4 | Potential Further Uptrend

Type:Bullish BounceKey Levels:Resistance: 1.29389Pivot: 1.2846Support: 1.28035Preferred Case:Price is trading in an ascending channel and near pivot level of 1.2846 which is also 38.2% Fibonacci retracement. Price can potentially go to the 1st resistance level of 1.29389 which is also 78.6% Fibonacci retracement and 78.6% Fibonacci projectionAlternative Scenario:Price can potentially dip to the 1st support level of 1.28035 which is also 38.2% Fibonacci retracement and 61.8% Fibonacci projection .

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdcad-h4-or-potential-further-uptrend"
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WTIUSD, H4 | Bullish momentum

Type: Bullish BounceKey Levels:Resistance: 79.341Pivot: 75.739Support: 72.882Preferred Case:Prices are on bullish momentum and abiding to our bullish trendline. We see the potential for a bounce from our Pivot at 75.739 in line with 100% Fibonacci extension and 78.6% Fibonacci retracement towards our 1st resistance at 79.341 in line with 200% Fibonacci Projection and 100% Fibonacci retracement. Technical indicators are showing bullish momentum.Alternative Scenario:Alternative Scenario: Alternatively, prices may dip towards our 1st support at 72.882 in line with 100% Fibonacci retracement.

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Dollar Largely Flat; Good Times Likely Lie Ahead

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USDJPY, H4 | Bullish momentum

Type: Bullish BounceKey LevelsResistance: 1.1344Pivot: 1.13197Support: 1.13029Preferred Case:Prices are on bullish momentum and abiding to our ascending trendline. We see the potential for a bounce from our Pivot at 1.13197 in line with 50% Fibonacci retracement towards our 1st resistance at 1.1344 in line with 78.6% and 100% Fibonacci retracement. Ichimoku clouds are also depicting strong bullish momentum.Alternative Scenario:Alternatively, prices may dip towards our 1st support at 1.13029 in line with 78.6% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdjpy-h4-or-bullish-momentum29"
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AUDCAD, H4 | Potential Bearish Drop

Type: Bearish ReversalKey Levels:Resistance: 0.92869Pivot: 0.92679Support: 0.9242Preferred Case:Price is abiding to a descending trendline resistance on the daily, signifying an overall bearish momentum. We can expect price to drop from pivot level in line with 50% Fibonacci retracement towards 1st Support in line with 38.2% Fibonacci retracement and 100% Fibonacci projection. Our bearish bias is further supported by the RSI indicator where it is abiding to the descending trendline resistance. Alternative Scenario:Alternatively, price could push higher to 1st Resistance in line with horizontal swing high and 78.6% Fibonacci projection.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/audcad-h4-or-potential-bearish-drop"
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BTCUSD, H4 | Potential Bullish Bounce

Type: Bullish BounceKey Levels:Resistance:Pivot:Support:Preferred Case:Price broke out of the descending trendline resistance, signifying a potential bullish momentum. We can expect price to bounce up from the pivot level in line with graphical overlap support, 161.8% Fibonacci extension, 61.8% Fibonacci retracement and 161.8% projection towards 1st Resistance in line with previous swing high and 161.8% Fibonacci projection. Our bullish bias is further supported by the stochastic indicator where the %K line is at the support level.Alternative Scenario:Alternatively, price could push down to the 1st Support level in line with the horizontal support level.

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Dollar Down, But Still in Holiday-thinned Trading

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Why Do Crude Oil Prices Rise?

Oil prices have rebounded this week, as concerns over the impact of the highly contagious omicron variant on the global economy eased, preliminary data showing the impact of the virus was milder than the Delta variant. However, investors remain cautious amid soaring infection cases.

Oil prices rose today amid expectations that :

• The US will not experience a significant economic shutdown due to the omicron surge.
• Given soaring natural gas prices in Europe and Asia, oil is likely to remain positive. Asian liquefied natural gas (LNG) prices surged this week, despite weak Asian demand, upside risks in the European gas market remain the main driver driving price movements.
• In addition, the increase in natural gas is also due to a colder US winter. Atmospheric G2 said today that sub-normal temperatures are expected in the western and central North US from January 1-5, and below-normal temperatures in the central US will last through January 10.
• Also, comments from Russian Deputy Prime Minister Novak supported crude oil prices. He said that global demand for crude would continue to recover due to consumption growth which countries had to learn to coexist with the virus. However, he added that the price of oil in 2022 may hover around $75 per barrel with a possible fluctuation of around 10% on both sides.
• Crude oil prices also received support from reduced supplies from Libya , as militias blocked the flow of crude from Libya’s Sharara oil field to ports in Zawiya and Mellitah.
• Iranian crude exports are unlikely to return to the market anytime soon. The senior US official said that Iran had not shown seriousness in recent talks to rejoin the 2015 nuclear deal, and the US was preparing for a scenario in which restoring the deal would not be possible.
• An EIA report last week showed US crude inventories on Dec. 17 were -7.9% below the 5-year seasonal average. US crude oil production in the week ended December 17 fell -0.9% w/w to 11.6 million bpd, which was -1.5 million bpd (-11.5%) below the February-2020 record high of 13, 1 million bpd.
• Operating US oil and gas rigs rose to their highest level since April 2020 in the past week, according to energy services firm Baker Hughes . The overall number now stands at 586, signaling an increase in output in the coming months.

USOil, D1

USOil is trading at $75.15 while UKOil is at $78.62 at the time of writing this article. From the USOil curve above, the decline was recorded at ±25% from the annual peak of $83.77 to the support level. However the price has returned the decline to the level of 61.8%FR around $75.50. The 200 EMA is still providing support to the upside, although the gains are no longer significant after the 4 day rally, although to reach $78.53 it is still possible as seen from the RSI line above the 50 level and OSMA on the buy side, although the MACD line is not yet at above the neutral line. Prices are likely to be choppy in the next few days. The closest price support is the recently broken resistance at $73.08 a move below this level is likely to consolidate. However, as long as this level holds, the bullish outlook is still possible, although limited to the projections of FE100% & FE138.2%.

Click here to access the Economic Calendar

Ady Phangestu

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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Market Update – December 28 – Risk-on sentiment continues

• It was another record setting performance for the USA500. It was its 69th new high of the year, which itself is the second best on record. Easing in Omicron fears and signs of strong holiday sales helped underpin the USA500‘s 1.38% jump to 4791. All 11 S&P sectors are higher, with gains paced by technology and energy. Travel stocks remain heavy though have recovered from their worst levels early in the session as Omicron concerns have been allayed some.
• USD (USDIndex 96.04).
• US Yields 10yr finished at 1.472%, below the 1.50% level since December 9. Treasuries were mixed with the long end outperforming in a flattening trade, while the front end was pressured by supply. A cautious tone could prevail near term to keep a bid in bonds, even as 2022 is expected to see 2, if not 3 quarter point rate hikes.
• Equities – Nikkei jumped 1.4% after stronger than expected production numbers. The ASX lifted 0.4%. The USA100 surged 1.39%, while the USA30 rallied 0.98% and are just shy of their historic peaks from November.
• USOil – extended gains to 75.82, after surging more than 2% to their highest in a month a day before.
• Gold – rise to $1,815
• FX markets – Yen lost ground as traders stayed in riskier assets, USDJPY lifted to 114.89, EURUSD 1.1326, Cable trades at 1.3434.

Today – Today’s calendar includes the aforementioned 5-year auction, along with data on home prices with the October S&P/Case Shiller report and the FHFA data. The December Richmond Fed index is also due.

Biggest FX Mover @ (07:30 GMT) NZDUSD (+0.46%) Retests 0.6815, sustaining 1-month highs. However sentiment remains neutral as fast MAs flattened while RSI and  MACD signal line & histogram are settled at neutral zone.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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CADJPY, H4 | Bullish Momentum

Type: Bullish BounceKey Levels:Resistance: 1.1344Pivot: 1.13197Support: 1.13029Preferred Case:Prices are on bullish momentum and abiding to our ascending trendline. We see the potential for a bounce from our Pivot at 1.13197 in line with 50% Fibonacci retracement towards our 1st resistance at 1.1344 in line with 78.6% and 100% Fibonacci retracement. Ichimoku clouds are also depicting strong bullish momentum.Alternative Scenario:Alternatively, prices may dip towards our 1st support at 1.13029 in line with 78.6% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/cadjpy-h4-or-bullish-momentum"
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DJI, H4 | Bullish Momentum

Type: Bullish BounceKey Levels:Resistance: 1.1344Pivot: 1.13197Support: 1.13029Preferred Case:Prices are on bullish momentum and abiding to our ascending trendline. We see the potential for a bounce from our Pivot at 1.13197 in line with 50% Fibonacci retracement towards our 1st resistance at 1.1344 in line with 78.6% and 100% Fibonacci retracement. Ichimoku clouds are also depicting strong bullish momentum.Alternative Scenario:Alternatively, prices may dip towards our 1st support at 1.13029 in line with 78.6% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/dji-h4-or-bullish-momentum"
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EURUSD, H4 | Bullish momentum

Type: Bearish ReversalKey Levels: Resistance: 1.1344Pivot: 1.13197Support: 1.13029Preferred Case:Prices are on bullish momentum and abiding to our ascending trendline. We see the potential for a bounce from our Pivot at 1.13197 in line with 50% Fibonacci retracement towards our 1st resistance at 1.1344 in line with 78.6% and 100% Fibonacci retracement. Ichimoku clouds are also depicting strong bullish momentum.Alternative Scenario:Alternatively, prices may dip towards our 1st support at 1.13029 in line with 78.6% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/eurusd-h4-or-bullish-momentum"
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USDJPY, H4 | Bullish Momentum

Type: Bearish DropKey Levels:Resistance: 115.468Pivot: 114.890Support: 114.529Preferred Case:Prices are on bullish momentum and abiding to our ascending trendline. We see the potential for a bounce from our Pivot at 114.890 in line with 161.8% Fibonacci extension and 161.8% FIbonacci retracement towards our 1st resistance at 115.468 in line with 200% Fibonacci projection and graphical swing high. Our bullish bias is further support by prices trading above ichimoku clouds and MA 18.Alternative Scenario:Alternatively, prices may dip towards our 1st support at 114.529 in line with 23.6% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdjpy-h4-or-bullish-momentum28"
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BTCUSD, H4 | Bullish Momentum

Type: Bullish BounceKey Levels:Resistance: 51913.04Pivot: 49304.35Support: 48017.39Preferred Case:Price broke out of the descending trendline resistance signifying a bullish momentum. Price should push further up if it closes above the pivot level in line with 61.8% Fibonacci projection and push towards 1st Resistance in line with 100% Fibonacci projection and 127.2% Fibonacci retracement. Our bullish bias is further supported by the Ichimoku Cloud where the price is holding above it.Alternative Scenario:Alternatively, price could drop down from the pivot level to 1st Support in line with 38.2% Fibonacci retracement and 61.8% Fibonacci projection.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/btcusd-h4-or-bullish-momentum28"
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AUDUSD, H4 | Short-term Bearish Drop

Type: Bearish ReversalKey Levels:Resistance: 0.72894Pivot: 0.72498Support: 0.71817Preferred Case:Price is reacting in an ascending channel, signifying bullish momentum. However, price is currently at a resistance, we can expect price to drop from pivot level in line with 127.2% Fibonacci projection and 127.2% Fibonacci Extension towards 1st Support in line with 38.2% Fibonacci retracement. Our short-term bearish bias is further supported by the stochastic indicator where the %K line is at the resistance level.Alternative Scenario:Alternatively, price could push higher to 1st Resistance in line with 161.8% Fibonacci projection and 161.8% Fibonacci extension.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/audusd-h4-or-short-term-bearish-drop28"
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The New Year Beckons – US

The year 2021 has basically wrapped up. Though under the clouds of Omicron, inflation, and reduced central bank accommodation, the extreme fears from a few weeks ago have faded. That provided an optimistic setting for a Santa Claus rally into the Christmas weekend. Global data has generally reflected a solid pick up in Q4 growth, even if dented somewhat by the variant. Inflation remains a risk significant risk but the FOMC and other central banks are addressing it and bond markets are giving policymakers the benefit of the doubt. There is little this week to distract from cautious merry making into 2022.

Most of the key US data reports were released ahead of the holidays and they have reflected a substantial jump in Q4 growth, with GDP estimated accelerating to a 7.0% clip from teh this month’s critical reports were released in the advance of the holidays, allowing a substantial fine-tuning of market estimates on Wednesday and Thursday before a light report week. This week’s slew of data largely narrowed growth prospects around existing expectations. The GDP growth rate in Q4 is anticipated at 7%, triple the 2.3% pace in Q3 clip. However, inflation prospects were also boosted slightly. Robust growth and near 40-year highs on CPI made the FOMC’s decision to accelerate the taper a relatively easy call.

Now comes the hard part, determining the timing and the pace of liftoff and tightening. Currently the markets are set for liftoff in May or June, with a quarter point hike, and possibly on or two on the year.

The thin data slate in the abbreviated week contains few top-tier releases. The Treasury’s $169 bln in shorter dated coupon auctions will be an interesting test of investor demand given several contradictory forces. The demand for the safety of Treasuries and their higher yields, along with further supply cuts will help cap yields. But the risks of persistent inflation, the Fed’s tapering and eventual rate hikes will push rates higher. As to these auctions, the total volume was cut by $7 bln from last month as the pandemic related borrowing needs have declined substantially. The 2-year closed 2.8 bps cheaper on Thursday at 0.745%. A stop there would be the highest since the 1.188% from February 25, 2020. The 5-year was up 2.6 bps at 1.270%. The 7-year was 3 bps higher at 1.425%. It is not clear that those rates will be attractive enough to attract strong demand, especially amid thin holiday conditions.

The US Dollar has remained range bound at the start of another holiday shortened week, with the USDIndex currently at 96.18. London, Canada, Australia and Hong Kong were among the markets still closed for the extended Christmas holiday weekend. Incoming data last Thursday was mixed, which saw jobless claims sit near trend lows, while personal income and consumption were in-line with forecasts. Durable orders beat expectations, though a large new home sales downward revision was not expected. The US was closed on Friday in observance of Christmas.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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Market Update – December 27

Stock markets were narrowly mixed across Asia in cautious trade, with Australia and Hong Kong among the markets still closed for the extended holiday weekend. In Europe, the UK is still on holiday and in North-America Canada will remain shut today.

• USD (USDIndex 96.20) steady within 96-96-25 area. US stocks sustain gains in contrast to Asia stocks which corrected lower despite further promises of support for the economy from officials in Beijing. Yields also rose; USOil & Gold under refresh pressure.
• Japan retail sales came in stronger than anticipated – the government last week announced more stimulus measures that also include a direct handout to families, which is boosting the chances of a consumption led recovery, although Omicron could still derail that scenario.
• US Yields 10yr has corrected -1.7 bp to 1.48%, as US Treasuries have found buyers.
• Equities – USA500 settled at 4730 (0.5% above key 4700), NASDAQ at 16344, USA30 at 35950, GER30 future is down -0.3%, Nikkei corrected -0.37%.
• USOil – reversed from $73.58, to 72.34, after airlines called off thousands of flights over the Christmas holidays amid surging COVID-19 cases, though Brent crude gained support from hopes that the Omicron variant will have limited impact on global demand. The contract did not trade on Friday because of the US market holiday. 
• Gold – steady above $1,805 as weaker US yields counter firmer Dollar.
• FX markets – Yen struggled, and USDJPY lifted to 114.68, EURUSD 1.1317, Cable trades at 1.3400.

Today – The data calendar is also pretty empty on both sides of the Atlantic, which will leave investors mulling virus developments and central bank outlooks, with early trading suggesting a cautious backdrop and limited moves.

Biggest FX Mover @ (07:30 GMT) EURAUD (+0.60%) Breached 1.5692, breaking the 20- and 50-hours SMA, which have been bullishly. MACD signal line & histogram turn positive. RSI 61.73 and rising.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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2021 was full of contradictions, so what should you invest in for 2022?

Inflation has risen – so why haven’t bond yields taken off? And is the equity market still the only game in town – or are investors deluded? John Stepek asks the experts their views on what’s been a very weird year

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The globally-focused investment trusts to buy for great returns

The bullish market outlook means investors should opt for investment trusts targeting the world’s great companies, says Max King. Here, he picks some of his current favourites.

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BTCUSD,H4 | Bullish Momentum

Type: Bullish BreakoutKey Levels:Resistance: 53447.13Pivot: 51516.62Support: 49368.58Preferred Case:Price is reacting in an ascending channel, signifying bullish momentum. However, price is currently at a resistance, we can expect price to drop from 1st Resistance in line with 127.2% Fibonacci projection and 127.2% Fibonacci Extension towards 1st Support in line with 38.2% Fibonacci retracement. Our short-term bearish bias is further supported by the stochastic indicator where the %K line is at the resistance level.Alternative Scenario:Alternatively, price could push higher to 1st Resistance in line with 161.8% Fibonacci projection and 161.8% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/btcusd-h4-or-bullish-momentum"
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CHFJPY, H4 | Bullish Momentum!

Type: Bullish BounceKey Levels:Resistance: 124.777Pivot: 123.916Support: 123.532Preferred Case:Prices are on bullish momentum. We see potential for a bounce from our Pivot at 123.916 in line with 38.2% Fibonacci retracement and 61.8% Fibonacci retracement towards our 1st resistance at 124.777 in line with 161.8% Fibonacci extension and 200% Fibonacci projection. Prices are trading above our Ichimoku clouds, further supporting our buAlternative Scenario:Alternatively, prices may dip towards our 1st support at 123.532 in line with 61.8% Fibonacci retracement and 100% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/chfjpy-h4-or-bullish-momentum"
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USDJPY, H4 | Bullish Momentum!

Type: Bullish BounceKey Levels:Resistance: 114.877Pivot: 114.216Support: 114.047Preferred Case:Prices are on bullish momentum and abiding to our ascending trendline. We see potential for a bounce from our Pivot at 114.216 in line with 100% Fibonacci retracement, 100% Fibonacci extension and 78.6% Fibonacci retracement towards our 1st resistance at 114.877 in line with 161.8% Fibonacci retracement and 161.8% Fibonacci Projection. Prices are trading above our Ichimoku Clouds, further signalling bullish momentum.Alternative Scenario:Alternatively, prices will dip towards our 1st support at 114.047 in line with 100% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdjpy-h4-or-bullish-momentum27"
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AUDUSD, H4 | Short-term Bearish Drop

Type: Bearish ReversalKey Levels:Resistance: 0.7289Pivot: 0.72511Support: 0.71808Preferred Case:Price is reacting in an ascending channel, signifying bullish momentum. However, price is currently at a resistance, we can expect price to drop from 1st Resistance in line with 127.2% Fibonacci projection and 127.2% Fibonacci Extension towards 1st Support in line with 38.2% Fibonacci retracement. Our short-term bearish bias is further supported by the stochastic indicator where the %K line is at the resistance level.Alternative Scenario:Alternatively, price could push higher to 1st Resistance in line with 161.8% Fibonacci projection and 161.8% Fibonacci retracement.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/audusd-h4-or-short-term-bearish-drop"
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Share tips of the week – 24 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/share-tips/604269/share-tips-of-the-week-24-december
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MoneyWeek Christmas quiz 2021

It’s been a year of speculative frenzy, economic uncertainty and political scandal. See which financial stories you remember – and which passed you by – with our Christmas quiz. Compiled by Jasper Spires

from Moneyweek RSS Feed https://moneyweek.com/economy/people/604268/moneyweek-christmas-quiz-2021
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MoneyWeek’s Super Six: December 2021 update on our investment trust portfolio

MoneyWeek’s favourite investment trusts have rocketed in the past ten years, says Merryn Somerset Webb. We will stick with them

from Moneyweek RSS Feed https://moneyweek.com/investments/funds/investment-trusts/604261/moneyweek-investment-trust-portfolio-update-december-2021
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Want to quit your job and live an egalitarian life off the land? Things aren't quite that simple

The idea of adopting a simpler lifestyle free from social hierarchies, economic inequalities and tiresome modern work appeals to many romantics – but there are some practical considerations, says Stuart Watkins

from Moneyweek RSS Feed https://moneyweek.com/economy/604258/economic-inequalities-and-evolution-of-capitalism
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Dollar Becalmed After Falling in Response to Omicron Hopes

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Market Update – December 24 – The Santa Rally arrived

Wall Street’s main indexes posted solid gains for a third straight session on Thursday, with the S&P 500 marking a record-high close, as encouraging developments gave investors more ease about the economic impact of the Omicron coronavirus variant. – RTS

• USD (USDIndex 96.00) weakened again and is having its worst week since September.   US stocks rallied again to new highs, Yields also rose; USOil & Gold both held on to healthy gains. Risk on for Santa as strong US data and good Omicron news lifted sentiment. Asian markets grind higher again.
• US Yields 10yr traded closed at  1.4903%,  having breached 1.50%  
• Equities – USA500 +29 (+0.62%) at 4725 (0.5% above key 4700)  NASDAQ +085%, #TSLA +5.76%  Eli Lilly +2.48%, PFE -1.41% – For the week, the S&P 500 rose +2.3%, the Dow gained about +1.7% and the Nasdaq climbed +3.2%. S&P Futures were up 0.66%. 
• USOil – rallied again $73.54, before settling at 73.32
• Gold – spiked to $1810 on the weaker USD, and holds at 1808
• Bitcoin rallied +4.5% with the risk-on mood, breaching 50k and trades at 51k now
• FX markets – EURUSD 1.1325, USDJPY holds up at  114.34, Cable breached  1.3400 and trades at 1.3410 now.

Today – Germany closed today & Monday, UK Half-day today and closed Monday & Tuesday. US markets closed today re-open until Monday.

 

Biggest FX Mover @ (07:30 GMT) NZDJPY (+0.46%) Continues the rally from Tuesday as JPY weakens on budget announcements, breached 78.00 now. MAs aligned higher, MACD signal line & histogram higher, RSI & Stochs  OB, H1 ATR 0.112 Daily ATR 0.7500.

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Singapore central bank $60 billion swap facility with Fed to expire on Dec. 31

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Turkey’s Missing Billions Signal Unannounced Lira Intervention

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The MoneyWeek Podcast: a very strange year, when forecasting anything became almost impossible

Merryn and John talk about the past year in the markets, the rise of inflation and the bond market's reaction (or lack of it), and conclude that nothing does what you expect anymore.

from Moneyweek RSS Feed https://moneyweek.com/investments/investment-strategy/604281/the-moneyweek-podcast-a-very-strange-year-when-forecasting
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EURJPY: Price level to watch out for

Japan’s growth forecast was raised to 3.2% for the 2022 fiscal year from the 2.2% real GDP growth forecast seen at the mid-year review in July, helped by a record additional stimulus budget approved by parliament this week. This will be the fastest growth since fiscal 2010 when the economy grew 3.3% after the global financial crisis.

Stimulus spending is expected to boost GDP by 1.5% this fiscal year and 3.6% next fiscal. But the government lowered its forecast for Japan’s real GDP to 2.6% in the current fiscal year, which ended in March from 3.7% previously, as the prolonged COVID-19 pandemic and chip supply constraints weigh on the recovery.

Japan’s economy, the world’s third largest, experienced an annualized contraction of 3.6% in the July-September quarter following a resurgence of COVID-19 cases, curbing private consumption which accounts for more than half of GDP.¹

USDJPY rallied +0.04% yesterday to a 3½ week high as safe-haven demand for the Yen was capped, after Japan’s Nikkei Stock Index closed +0.16% higher. The Yen also came under pressure Wednesday after the minutes of the BOJ’s October meeting said the Yen’s weakness had had a positive impact on the overall economy. Meanwhile the Yen weakened against the Euro yesterday by 0.4%, continuing the upward movement for the 3rd day.

EURJPY,H4

The asset is currently trading below the resistance level of 129.63, gaining 0.2% in the Asian session. Technically, a break of the resistance level would bring the bias to the upside at the 50.0% (130.40) retracement level. However, as long as resistance persists, the asset is likely to re-consolidate within a bound price range. And a break of the support at 127.37 will confirm the continuation of the correction wave for a move to the downside at the 126.00 price level. Overall these assets are likely to consolidate, yesterday’s gains fueled by inflationary pressures in Europe which lifted the 10-year German bond yields to a 3½ week high of -0.269%. France’s Nov PPI was up +17.4% y/y, the biggest gain since the data series began in 1996. The ECB’s Hawkish comments on Wednesday also supported the EUR after ECB Governing Council member Rehn said the ECB “will respond” if inflation picks up high.

¹) https://www.reuters.com/

Click here to access our Economic Calendar

Ady Phangestu

Market Analyst

Click here to access our Economic Calendar

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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Will emerging markets have a better 2022, or is it downhill from here?

Emerging market equities had a dismal year in 2021. John Stepek asks if 2022 will be any better, and takes a look at some of the most promising areas for investors.

from Moneyweek RSS Feed https://moneyweek.com/investments/stockmarkets/emerging-markets/604283/emerging-market-equities-have-a-better-2022
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Market Update – December 23 – Risk On; as USD softens

The risk of needing to stay in hospital for patients with the Omicron variant of COVID-19 is 40% to 45% lower than for patients with the Delta variant – Imperial College, London

“The unpredictable path of the pandemic and its related impacts on growth and inflation continue to dominate investor risk appetite,” – Invesco

• USD (USDIndex 96.00) sinks to key level as US stocks rallied again and Yields also rose; USOil breached $72.00 and Gold broke $1800 as the USD weakened. Risk back on, & a weaker JPY & CHF in rather low volume markets. Asian markets also higher again. OMICRON; signs of market boredom continues – Inflation a bigger risk than Covid-19 the mantra for 2022. 
• US Yields 10yr traded up to  1.457% and trades at 1.46% now 
• Equities – USA500 +47 (+1.02%) at 4696 (still below key 4700)  Nasdaq +1.18%, – USA500.F trades up at  4698. #TSLA +7.49% (Musk said he’d sold all the shares he is selling – for now) APPL +1.53%, GOOGL +2%
• USOil – rallied again – inventories -4.7m barrels vs -2.4m peaked at $72.76, as sentiment lifts, the low inventories and increasing demand. 
• Gold – broke $1800 on the weaker USD, holds  1805 level now.
• FX markets – EURUSD 1.1328, USDJPY rallies to 114.25, Cable to 1.3363

European Open – German import price inflation jumped to 24.7% y/y in November, from 21.7% y/y in the previous month. The March 10-year Bund future is down 7 ticks, slightly underperforming U.S. futures. More pressure then for bonds, which already declined yesterday as stock markets improved. However, while governments in Berlin and London have shied away from “canceling Christmas” with even tighter restrictions, more virus measures are underway for next week to prevent a spike in the number of those forced into quarantine disrupting essential services. DAX and FTSE 100 futures are currently posting gains of around 0.5%,  Hawkish comments from ECB’s Schnabel yesterday highlighted that even the ECB is on the way to phase out stimulus now, even though it will continue to lag Fed and BoE.  Trading is likely to start to dry up ahead of the holiday weekend, which in Germany and the U.S. essentially starts tomorrow and in the U.K. is extended until next Tuesday.

Today – US Personal Income, Consumption, PCE Price Index, Durable Goods, New Home Sales

Biggest FX Mover @ (07:30 GMT) NZDJPY (+0.46%) Continues the rally from Tuesday as JPY weakens on budget announcements, breached 78.00 now. MAs aligned higher, MACD signal line & histogram higher,  RSI & Stochs  OB, H1 ATR 0.112 Daily ATR 0.7500.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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Dollar Edges Lower as Confidence Over Omicron Supports High Yielders

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USDJPY, H4 | Potential For Pullback

Type: Bearish ReversalKey Levels:Resistance: 114.514Pivot: 114.253Support: 113.681Preferred Case:Prices are consolidating in a parallel channel. We see the potential for a dip from our Pivot at 114.253 in line with 100% Fibonacci extension and 78.6% Fibonacci extension towards our 1st support at 113.681 in line with 61.8% Fibonacci retracement and 61.8% Fibonacci extension. Ichimoku clouds are forecasting the dip and also our RSI is close to a level where dips previously occurred.Alternative Scenario:Alternatively, prices may climb towards our 1st resistance at 114.514 in line with 127.2% and 100% Fibonacci extension.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/usdjpy-h4-or-potential-for-pullback23"
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COVID Restrictions Returning Across Eurozone

Outlook DarkensThe near term outlook for the Euro has weakened dramatically in the face of the current omicron outbreak. Surging infection levels in the eurozone over Q3 worsened across Q4 as the omicron outbreak took hold. In light of the new wave, several countries were forced to take measures, of varying severity. However, as the outbreak continues and the weather grows colder into winter, we are seeing a worrying of trend of greater restrictions being announced. The fear is, that following Christmas (which is expected to see a spike in infections) and with the winter developing, greater restrictions will be needed in Q1.Restrictions ReturningRestrictions have returned in several key EZ countries such as France, Germany, Ireland, the Netherlands, Spain and Portugal. With Christmas approaching, many countries are setting out fresh restrictions, including Germany where the government announced this week that as of December 28th, private gatherings will be limited to ten people and nightclubs will be closed. In the Netherlands, restrictions are even tighter with the country currently in lockdown until mid-January.WHO WarningThe WHO warned this week over the risks from the current omicron outbreak in Europe, forecasting a “significant surge” in infections after Christmas. While initial data suggests that the new variant s milder than Delta, the issue is that high levels of infections still create a great deal of pressure on healthcare systems. Additionally, risks of serious illness remain elevated in the unvaccinated.Market ReactionIn terms of how markets are reacting to news of the current uptick in restrictions as we head into the end of the year, bond yields in the eurozone have been seen trading higher in recent days. Traders have been turning to safe-haven assets over higher yield, risk assets such as equities and commodities, a theme which is likely to develop further.Inflation ImpactStill, despite the risks around omicron, the impact on eurozone inflation is not clear cut. This week we heard ECB’s Muller warning over two-way inflation risks around omicron. Muller warned that a great deal of the impact on inflation will depend on how governments and companies respond to the virus. During an interview yesterday, Muller said: “If there are further lockdowns and sharp restrictions on the economy, demand could decline and more likely could result in downward pressure on inflation. On the other hand, if supply-chain problems, for instance, last longer due to omicron, there could be upward pressure on inflation.”Technical ViewsEURUSDFor now, EURUSD continues to trade within the tight block of consolidation between support at 1.1190 and resistance at 1.1377. With both MACD and RSI bullish, there is still a chance that we break higher here, in which case, I’ll be watching price as we test the bear channel top and resistance level around 1.1527. To the downside, if we roll from here, a break of 1.1190 will open a test of 1.10 next.

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UK GDP Softened In Q3 Ahead of Omicron

Weaker-Than-Expected GDPWith most of the recent news flow out of the UK focusing on the risks and uncertainty around omicron, the latest set of economic data released today had some disappointing news for GBP bulls. The Office for National Statistics released its Q3 GDP readings today which showed that UK economic activity was already slowing down, well ahead of the emergence of the omicron variant.Deficit WidensFinal UK Q3 GDP was seen at 1.1%, down from both the prior and expected 1.1%. Additionally, the UK current account deficit was seen expanding over the period to – £24.4billion. This marked a significant widening from the prior -£8.3 billion and a much deeper deficit than the -£15.8 billion deficit expected. Finally, revised business investment was also seen weaker than at expected at -2.5%, well below both the prior and expected 0.4% reading the market was looking for.Net-Trade The Main DragLooking at the breakdown of the GDP data, net trade was seen as one of the biggest downward pressures on growth with the UK trade balance seen falling to -1.9% over the prior. This was down from the -1.2% seen in the prior quarter and highlights a worrying trend in UK trade data. Given that this latest downturn in activity came in ahead of the return of the UK government’s “Plan B” measures, the fear now is that activity over Q4 will be even lower. Looking ahead, the risk of yet stricter measures from the government (particularly in Q1 2022), raises questions over the outlook for GBP into early next year.Omicron RisksThe government recently announced that no new measures will be brought in ahead of Christmas, along with the current isolation time having be cut from ten days to seven days. However, the government has said that it cannot rule out further restrictions and, given the worrying trajectory in infections (and the risks of a big spike around Christmas), the risks of a circuit breaker lockdown are growing, keeping the near term outlook fraught with downside risks for GBP.Technical ViewsGBPUSDFor now, GBPUSD continues to hold along the base of the bear channel from YTD highs. Price has carved out a tight block of consolidation along the 1.3196 level support and, with light trading ahead, looks unlikely to break in the next few days. In terms of levels to watch, the 1.3349 is the key upside level for bulls, a break of which will turn focus to 1.3461 and the channel top thereafter. To the downside, a break below 1.3196 will turn focus to 1.3031 next.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/uk-gdp-softened-in-q3-ahead-of-omicron"
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Frisby’s Forecasts: how did my predictions for 2021 pan out?

Dominic Frisby looks back at the predictions he made at the start of the year and finds that, all things considered, he hasn't done badly at all.

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Investment Bank Outlook 22-12-2021

Credit AgricoleAsia overnight While the news flow remains mostly positive, the risk-on rally faded a little during the Asian session. US President, Joe Biden, continues to say he can get a deal done with Senator Joe Manchin on the Build Back Better bill and the US FDA is set to approve two Covid drug treatments from Pfizer and Merck & Company. Countries in the West also continue to quickly roll out booster jabs. Investors are seeing the climbing infection rates, however, and remain nervous. S&P500 futures were trading slightly in the red and most Asian bourses modestly higher at the time of writing. In G10 FX, the USD was the outperformer and the AUD and NZD the underperformers. The AUD was weighed down by reports of rapidly rising Covid cases in Australia.CIBCFX FlowsThe session started off good but reversed by midday Tokyo. I believed omicron fears, Bloomberg noted demand for risk remains shaky. Singapore announced freezing new ticket sales for vaccinated travel lanes for entry as the city-state looks to stem import of the omicron variant.AUD$ traded lower from morning’s high 0.7154. Initial risk-on saw some shorts covered by short term accounts. Expect to see some bids around 0.7100 linked to option strikes, do remember A$720mio of 0.7100 put will roll off tomorrow.EUR$ rose to 1.1294 where offers were talked about above 1.1300, they could also be linked to 1.1300 strikes due this week worth more than €2.6bn. Sentiment changed and EUR$ moved back to the 1.1270s.$YEN remained comfortably above 114.00, there was light buying for the Tokyo fix and activity stalled. While I am a bull, will come as no surprise that Japanese will likely cap 114.25-30. Keep in mind large strikes at 115.00 for this week, total more than $2bn. Not much heard about the downside, probably bids 113.50-60.The Loonie is strong, despite AUD$ weakening in the late morning, $CAD stayed near the lows. I believed there are people getting out of longs as well as A$CAD, ahead of tomorrow’s October GDP release. Our economist wrote heading into the omicron wave, Canada’s economy was speeding ahead. But now, with restrictions being reimposed and mobility likely to fall, that momentum is set to hit a speed bump early in the new year. Our call is in line with general consensus, +0.8% from +0.1% over the month. Seeing strong offers on topside.CitiA lens on the USUSD ticked higher during the Asian session, with the remainder of the G10 all in the red against the dollar. UST was flat on the day. Our trader Hideyuki Liu notes the following:–With each day bringing us ever closer to year-end, treasuries in today's Tokyo session were largely sideways. Long-end has remained their good bid from yesterday's 20y auction, with 5s30s trading around 65bp for much of the day. Flows were seen in buying in 5y to 30y from RM in moderate sizeElsewhereFX activity slumped, with our etraders noting interbank volumes were at 75% of averages. Leveraged names were seen buying GBP and SGD, while selling JPY, EUR, CAD and CNH. Meanwhile, Real Money was buying HKD, while selling JPY, AUD, and SGD.

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Dollar Edges Higher; Omicron, Hard-Line Russian Stance in Focus

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Market Update – December 22 – Stocks recover poise

“COVID remains a threat to the global economy. Initial evidence suggests the Omicron variant is more transmissible but results in less severe illness compared to previous variants,” – CBA

• USD (USDIndex 96.50) held onto gains as US stocks recovered all of Monday’s losses, as Yields also rose; USOil rose 3.7% breaking back over $70.00 and Gold once again pivots at $1788. Risk back on, & a weaker JPY & CHF. Asian markets also higher again. Huge spike in European wholesale power prices – OMICRON signs of market boredom? – Biden orders 500 million free at-home tests, UK & US cut contact isolation times from 7- to 5-days, Israel offers a 4th dose of the COVID-19 vaccination to people over 60.
• Turkish Lira holds on to gains for now USDTRY at 12.60.
• US Yields 10yr traded up to  1.487% and trades at 1.46% now 
• Equities – USA500 +81 (+1.78%) at 4649 Dow +1.6%, Nasdaq +2.4% – USA500.F trades up at  4634. Nike +6.15% & Micron +10.54% after earnings beat. Other movers; TSLA +4.29% & CITRIX +13.63% as takeover target. PFE -3.39% & MRNA -2.98%
• USOil – rallied 3.7%  peaking at $71.45, as sentiment lifts, low inventories and increasing demand. 
• Gold – once again rejected $1800 and pivots around the key 1788 level .
• FX markets – EURUSD 1.1264, USDJPY rallies to 114.15, Cable recovers form 1.3200 to 1.3255 now

Overnight – BOJ Minutes: “See need to keep monetary easing despite costs” (no surprise).  UK Q3 GDP unexpectedly revised down to 1.1% q/q from 1.3% q/q reported initially. Business investment -2.5% vs. 0.4% and Current account deficit leapt to -£24.4b vs. -£15.8 expected and -£8.6b in previous quarter.

European Open – The March 10-year Bund future is up 16 ticks at 173.47, matching moves in Treasury futures. The long end outperformed and 30-year futures have been rallying overnight, as the risk on rally in stocks started to run out of steam overnight.  DAX and FTSE 100 futures are still posting gains of 0.45 and 0.3% respectively, but US futures are fractionally lower, as virus developments and the outlook for US fiscal stimulus remains in focus. In Europe most governments seems to be shying away from imposing stricter lockdown measures this side of the Christmas holidays, but that may mean more stringent measures are needed thereafter.

Today – US GDP, Consumer Confidence, Existing Home Sales

Biggest FX Mover @ (07:30 GMT) GBPCHF (+0.31%) Bounced from from test of  1.2150 lows Monday & Tuesday to 1.2270 now. MAs aligned higher, MACD signal line & histogram higher but stalling over 0 line since mid-Tuesday, RSI 68 & rising, H1 ATR 0.0012 Daily ATR 0.0087.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

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Aussie Higher Following Hawkish RBA Minutes

Optimistic Tone From RBAThe Aussie Dollar has seen better demand across the early European session on Tuesday following the release of the RBA meeting minutes overnight. The minutes from the bank’s December meeting saw the central bank striking a broadly optimistic tone as it highlighted plans to press ahead with tapering in 2022, due to end in May. Additionally, the minutes showed that the bank discussed more aggressive options also, including ending asset purchases as early as February if economic data performed better than current forecasts. A further option under discussion was to taper in February and reassess in May if economic activity was slower than forecast.Labour Market ImprovingWith many central banks within the G10 shifting their sights towards tightening, the RBA is among one of the more hawkish. The central bank opted to keep monetary policy on hold in December allowing until the December meeting to give time for the omicron variant to be properly assessed. However, the tone of the meeting was firmly encouraging with the minutes noting that “Timely indicators suggested that economic activity, particularly household consumption, was recovering strongly. Leading indicators of labor demand pointed to a strong recovery in labor market conditions in coming months. ”Indeed, the bank’s last meeting came ahead of the latest Aussie employment data which showed hitting rising to record number last month, sending the unemployment rate lower still.In terms of the options discussed at the meeting, the RBA noted “These options reflected the expectation that the economy would continue to bounce back”. Looking ahead, the RBA noted that “The emergence of the omicron variant was a new source of uncertainty, but it was not expected to derail the recovery.”Inflation Still An IssueThe key sticking point for the RBA continues to be inflation and, within that, wage-growth specifically. The bank noted that inflation is likely to remain subdued in the near term and rates will not be lifted until prices are back in the 2% - 3% target band. On this point, the minutes noted that “This will require the labor market to be tight enough to generate wages growth that is materially higher than it is currently, this is likely to take some time and the board is prepared to be patient.”In all, the minutes were highly supportive of the back progressing along with tightening plans when it meets again February, provided omicron hasn’t damaged the economic recovery. Given that it is still early days in this wave, however, it is still too early to tell just how damaging the omicron outbreak will prove, adding cause for some uncertainty near term.Technical ViewsAUDCADThe rally off the bear channel low and .8959 - .9026 support region has seen price trading back firmly above the .9112 level. Price is now approaching the bear channel top and .9251 / .9267 resistance region. With both MACD and RSI firmly bullish, a break above this region will mark a strong bullish development, turning focus to .9391 next.

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The IndeX Files 21-12-2021

Risk Sentiment Stabilises Following Monday's Sell-OffBenchmark global equities indices are seeing better buying on Tuesday amidst a mild recovery in risk appetite. There is still a great deal of caution around the omicron news flow. However, for now it seems that sentiment has improved since the heavy selling we saw across the European open yesterday. In the UK, the PM avoided adding fresh COVID restrictions ahead of Christmas, which has allowed for better trading in UK assets. While further restrictions have not been ruled out following the holiday, there is at least a sense of relief at having avoided restrictions ahead of the festive period.Still despite, the sight rebound seen so far today, equities remain down from recent highs and the near-term outlook remains vulnerable to fresh downside shocks. In Europe, the situation remains precarious with increasing numbers of countries adding fresh restrictions and, in some cases, lockdowns. New Zealand announced this week that it will delay its planned border reopening in the New Year while it assesses the risk from Omicron. In the US, plans to return workers to the office have been postponed in many regions as a result of omicron, once again underscoring the uncertainty around the new variant.Looking ahead this week, traders will be keen to receive the latest US core PCE figure on Thursday. A strong reading will no doubt give the Dollar a boost, weighing on equities as a result of bolstered Fed tightening expectations. However, given the holiday In the US and Europe on Friday, trading is expected to remain light.Technical ViewsDAXThe DAX remains below the broken rising trend line for now, following the rebound off the 15078.83 level. Between there and 14791.27 is a major support region for the DAX. While price holds above here, the longer-term focus is on a continuation higher. Below there marks a bearish shift and will turn focus towards the 14170.79 level next.S&P 500The S&P has turned lower from the latest test of the 4692.75 level. For now, price is being supported by the rising channel low, just ahead of the 4475.25 level. While above here, the focus is on an eventual break higher with 4937.50 the next big upside marker to note. To the downside, a break of 4475.25 turns the focus to 4295.75 next.FTSEThe correction lower from 7362.6 saw the FTSE breaking below the 7241 level and testing below 7137 also, where buyers stepped back in. Price has since been driven sharply back above the 724 level and, with both MACD and RSI turned higher, the focus is now once again on further upside with a break of 7362.6 targeting 7444.3 next.NIKKEIFor now, the NIKKEI continues to trade around the midpoint of the large contracting triangle pattern, still straddling the 28356.6 level. With indicators mostly flat here and the market having lost momentum, further range action looks likely. The key levels to watch for an upside or downside break, respectively, are 29464.9 and 27422.9.

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In praise of profits – Ed Yardeni’s stirring defence of capitalism

It is commonly held that the average American's income has not risen for decades. But in truth, real earnings have been rising by 1.5% since 1995. And that's down to one thing, says Max King: capitalism.

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Investment Bank Outlook 21-12-2021

Credit AgricoleFX FlowsRisk oversold? US equity futures up, most of Asian indices are positive.RBA published minutes for the December meeting, board members recognized that the omicron variant had introduced additional uncertainty, but believe that it is unlikely to derail Australia's recovery. Our macro strategist Patrick said RBA will raise rates later than most elsewhere. Limited price action for AUD$, attempts to take this lower but felt like bids are planted below 0.7100. And there are more than A$1bn of 0.7100 strikes maturing this week. Small risk-on has taken the pair to 0.7115.$YEN traded lower on back of Tokyo fixing supply but came back up when risk sentiment improved. Exporters should have interests on topside as we approach month-end while buyers sitting near 113.30CAD recovered against the USD, thanks to oil futures and AUD$. We should see sell orders scattered on top and a barrier at 1.3000. In our Monthly FX Outlook, our economics team said outperformance in Canada’s labour market shows that slack is rapidly vanishing, and inflation is well above target. Omicron is likely to see a setback in services employment and a weak Q1 GDP print. Our outlook for 150 bps in BoC rate hikes in the next two years, divided equally between 2022 and 2023, is a bit more drawn out than market pricing. Also weighing on the Loonie in early 2022 will be a lack of upside in commodities. We see $CAD around 1.29 over Q1 and 1.30 for Q2.One overnight commentary said offers in EUR$ above 1.1300, no mention of names but I suspect these are from those eager to rid of long position. UST yields are higher, risk is on and EUR$ nudged up. Germany will release January GfK consumer confidence today, market expects it to slip to -2.7 from -1.6. Two option strikes rolling off Thursday December 23. €1.73bn at 1.1225, €1.2bn at 1.1300. Jeremy Stretch wrote that unless fiscal policy proves significantly more expansive than anticipated, a long period of ECB policy inertia, set against firming expectations for Fed hawkishness, underlines our bias for the EUR to remain on the defensive in 2022. We see EUR$ at 1.11 over Q1 and then 1.10 in Q2.CitiEuropean OpenLow volumes across asset classes signal that we have entered a festive mood as we near Christmas. USD traded flat, with the remainder of G10 currencies trading mixed against it. EM currencies fared similarly, trading mostly flat. Omicron risks were top of mind, with news from the Associated Press yesterday that Omicron is the dominant strain in the US. New Zealand delayed its border reopening due to the omicron variant concerns as well. RBA minutes were broadly in line with earlier messaging. Regardless, equities and oil ticked higher modestly today.We will see consumer confidence prints from EUR today, with Germany GfK Consumer Confidence at 07:00 GMT and Eurozone Consumer Confidence at 15:00 GMT. GBP will sight PSNB ex Banking Groups at 07:00 GMT, while SEK will receive the Economic Tendency Survey at 08:00 GMT. CAD sees Retail Sales at 13:30 GMT. In the EM space, HKD receives CPI at 08:30 GMT and COP will receive its monetary policy minutes at 22:00 GMT.

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