General analysis GBPUSD, EURUSD, NZDUSD, AUDUSD, USDCAD, XAUUSD, Brent, WTI for 04.01.2022
At the beginning of the new year 2022 the US currency is showing strength. Yesterday the USD strengthened thanks to rising US government bond yields. So the rate on ten-year bonds rose by 1.6% and the yield on two-year bonds reached March 2020 levels. The USD continues to get support from the aggressive actions of the FRS, which contributes to the increase in the volume of purchases of the American currency. Another driver of the U.S. currency growth is the rapid spreading of Omicron strain. At the same time today there was information about detection of new strain COVID-19 in France. According to the preliminary data the virus got to Marseilles from Cameroon, which will also contribute to the fall of interest towards risks and further investments in the "safe haven assets".
EUR/USD lost ground on Monday but continues to hold near the strong psychological level of 1.1300. The "dovish" position of the ECB promotes decrease in the European currency. Today the pair was supported by the release of the strong German unemployment statistics. Unemployment rate in December fell by 0.1% to 5.2%. In addition the volume of retail sales in Germany has grown by 0.6% in November. At the same time many euro-area countries are strengthening social distancing measures. On the threshold of the holiday season the new restrictions will have a negative impact on macroeconomic statistics. Investizo predicts the fall of the pair in the medium and long term.
GBP/USD showing more stability. The Bank of England surprised market participants by tightening monetary policy in December. The British Prime Minister Boris Johnson said that the government would not introduce a new lockdown as Omicron is less dangerous to the country's citizens than previous versions of the virus. Moreover, today's macroeconomic statistics showed that business activity in the UK increased in December and mortgage lending increased in November.
AUD/USD and NZD/USD declined on Monday amid investors' falling risk appetite. Both currencies of the Pacific area were affected by the suspension of trade in shares of Evergrande Group on the Hong Kong stock exchange. In addition, the difficult epidemiological situation in both countries should be taken into account. USD/CAD is strengthening due to the strong dollar. At the end of the week a number of important macroeconomic data will be published in Canada, namely the labor market, business activity and trade balance reports.
Oil market is rising moderately ahead of OPEC+ meeting. Investors expect the participants of the agreement to decide on production increase, pointing to the high demand for fuel. Also, Brent and WTI were positively reacting to the news that the volume of strategic oil reserves, which the U.S. and its allies wanted to release in order to reduce prices, was lower than it was expected.
XAU/USD dropped substantially on Monday. At the same time, the trading instrument held above the strong 1800 level. The dollar as an asset is more attractive to market participants than the precious metal. However, the emergence of a new strain could make a correction within a month. So far, nothing is known about the new strain and its effects on the body. If the virus is able to slow down economic activity in the U.S. and thwart the Fed's plans, gold could regain its "safe haven asset" status.