The US dollar made a solid comeback on the first day of the year's last trading week and remained well-supported by the Fed's hawkish outlook, still indicating at least three rate hikes next year. COVID-19’s Omicron variant continues to spread rapidly around the world, which factors into investors' growing concerns. As data continues to be published on the new variant, it appears that the new strain is not causing more deaths and that hospitalizations are much lower than the Delta variant.
Key Economic Data and Events:
US Dallas Fed Manufacturing Outlook Levels
FHFA House Price Index MoM
European Union YOY Retail Sales
US Pending Home Sales YoY
US Initial Jobless Claims
December 27, 2021
EUR/USD 1.1326 GBP/USD 1.3424 USD/CAD 1.2805 AUD/USD 0.7232 USD/JPY 114.77 USD/CNH 6.3757 USD/ILS 3,1185 USD/MXN 20.6700 USD/CHF 0.9177 USD/INR 75.05 USD/BRL 5.6645 USD/SGD 1.3568 USD/DKK 6.5646 USD/SEK 9.1095 USD/NOK 8.8485
USD strengthened amid the Fed's hawkish outlook, indicating at least three rate hikes in 2022. The US dollar strengthened against major world currencies today except for sterling.GBP
GBP strengthened against the USD as rates climbed above 1.3430. Over the holiday weekend, the UK reported 120K new daily COVID cases. British Prime Minister Boris Johnson has ruled out additional coronavirus-related restrictions until at least the first week of 2022. Investor concern continues to grow as the infection spreads at a rapid pace.EUR
EUR/USD is steady in light trading, volumes likely be kept to a minimum given the holiday week and the lack of key events on the macroeconomic calendar.CAD
CAD weakened against the USD and was one of the worst performers against the greenback. Crude oil futures dropped 1% as traders weigh the impact of soaring coronavirus infections globally.ASIA/PACIFIC
AUD/USD continues to follow its intraday descent and has dropped to two-day lows near 0.7200. Uncertainty over the continuing rise in Covid-19 cases due to the Omicron variant has overshadowed recent optimism.
The Japanese yen continues to weaken against USD for the third straight week. USD/JPY inches closer to 115.00, but has settled around 114.70 mid-way through the European markets.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory
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