Forex Market Recap (28-03 December 2021)

The JPY was the big winner this week while the AUD was the biggest loser by Friday close. Last week’s negative sentiment sparked by the rise of the Omicron variant spilt over into this week and seemed to strengthen as the week rolled on. Despite there being no hard evidence yet of the variant being more deadly than previous variants, headlines of new cases, a higher transmission rate and rising lockdown protocols were enough to push traders to unload risk assets.

USD:

• Biden says he doesn’t expect more travel restrictions or lockdowns as omicron Covid variant spreads
• Fed Chairman Powell retires the word "transitory" in describing inflation
• House Prices Are Up 18.5% the FHFA reports
• ISM Manufacturing PMI rises to 61.1 in November as expected
• ADP National Employment Report: Private Sector Employment Increased by 534,000 Jobs in November
• Fed’s Mester open to faster taper to win space for rate hike
• Jobless claims: 222K, up 28K from previous week
• Senate passes bill to avert government shutdown, sends to Biden for signature
• FOMC’s Quarles: Fed would have to consider rate hikes if inflation remains above 4% by next spring
• IHS Markit US Services PMI dips to 58.0 in November vs. 58.7 in October

EUR:

• ECB Panetta says they doesn’t need to intervene on inflation for now
• German inflation surges to 6% as ECB insists spike will pass
• French inflation hits 3.4%; highest rate in more than a decade
• Eurozone PPI at 5.4% m/m in October, 21.9% y/y
• Eurozone Retail sales rose 0.2% in October, below expectations
• German services PMI was slightly up in November to 52.7 vs. 52.4 in Oct.
• France services PMI rose to 57.4 in Nov. from 56.6 in Oct.
• ECB Lagarde says they are likely to avoid a long-term policy commitment in December given pandemic developments and high inflation reads

GBP:

• Mortgage approvals slide to 67K in October, the lowest since mid-2020
• BoE’s Bailey says economic impact of Covid remains strong
• House prices hit 10% y/y in November; 0.9% m/m
• Services PMI in November: 58.5 vs. 59.1 in October; “New business growth hits five-month high despite surging price inflation”
• BoE Saunders, a known policy hawk, says he may pause on rate hike vote due to Omicron

CAD:

• Industrial Product Price Index (IPPI), increased 1.3% m/m in October and 16.7% y/y; RMPI was up by 4.8% m/m in October, following a 2.4% m/m increase in September
• GDP grew by 5.4% in the third quarter of 2021, better than 3.0% forecast
• Building Permits Rise 1.3% m/m in October
• Employment rose by 153K in November, much higher than 37K expected growth; Unemployment rate fell from 6.7% in October to 6.0%

JPY:

• Japan einstates ban on entry of foreign visitors as Omicron spreads
• Manufacturing PMI rose to 54.5 in November
• Policymaker Adachi says as Omicron risks grow, the BoJ in no hurry to boost stimulus
• BoJ member Suzuki signals a chance of ending pandemic-relief programs
• Japan services sector grows at fastest pace since 2019 in November to 53.0 vs. 50.7 in October

AUD:

• Building approvals slumped 12.9% vs. projected 1.4% dip
• Private sector credit rose 0.5% vs. 0.6% forecast
• AIG manufacturing PMI shrugs off Delta-related lockdown in November
• Trade balance narrowed from 11.82B AUD to 11.22B AUD
• Retail sales rose by another 4.9% as expected
• Australia tightens internal borders to curb spread of Omicron

NZD:

• New Zealand building permits drop 2% in October (-1.9% in September, +10.5% y/y)