The first week of 2022 has seen a firmer USD, buoyed by a rally in US Treasury yields as stock markets post new all-time highs. Still to come, FOMC Minutes tonight and NFP on Friday.
The Market Week – January Week 1
The start of the New Year is a week packed with data and so far, a positive bias persists, with Yields, Stocks and the USD all firmer. Omicron cases are rocketing and hold the headlines, but severity remains less than previous variants. Key data this week includes a raft of global PMIs, the FOMC Minutes tonight and non-farm payroll data on Friday.
Jobs growth continues to share the headlines, with weekly claims dropping and holding below 200,000. NFP data this week is once again expected to demonstrate a tight US labour market, with the headline number at 425,000, Unemployment declining to 4.1% and Earnings rising to 0.4% this month.
The vaccine and booster rollout programmes for Omicron continue to focus sentiment. The variant’s transmissibility is testing global health systems, (cases have topped 1 million a day in the US) but the severity of it also appears less than previous variants. Data from South Africa suggests the peak of cases and hospitalizations has already been seen.
In FX the USDIndex holds its bid north of 96.00, having tested down to 95.55 to close out the old year, while EURUSD sank to 1.1270 before recouping the key 1.1300 handle. USDJPY lifted to new 5-year highs at 116.34 as the differences between the FED & BoJ policy became more apparent and yield differentials widened. Cable continued its late December recovery to breach the key 1.3500 level and spiked as high as 1.3555.
US stock markets once again enjoyed a “Santa Rally”, reaching new all-time highs, and are on the front foot in the first week of the new year. The USA500 has spiked over 4,800, the USA30 topped just shy of 37,000 and although the USA100 lags it still holds over 16,200.
The Gold price spiked to $1830 on Friday to close 2021, only to reverse significantly on Monday to test below the key $1800 support area to welcome 2022. Today the price trades north of $1815 holding a 50% re-trace of Monday’s sell off.
USOil prices were supported by the OPEC+ decision to increase production by 400,00 barrels a day during February, and big inventory drawdowns have also supported the price. $77.00 was breached yesterday holding the key $75.00 level. Today’s inventories are expected to show another 3.5million barrel drawdown.
The yields were the key driver of the market once again this week, with the US 10-Year Treasury Note breaching 1.50% significantly and topping as high as 1.668% as Treasuries had their worst start to a new year since 2009.
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Stuart Cowell
Head Market Analyst
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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.
