Will the Risk-Off Sentiment Caused by the Omicron Variant Persist?

Will the Risk-Off Sentiment Caused by the Omicron Variant Persist?

29.11.2021

Last weekend, the three major stock indices in the U.S. market all fell, creating a risk-off sentiment characterized by falling stock prices, lower interest rates, and lower crude oil prices.WTI crude oil prices fell sharply, dropping about 7% to around $71.70. This was due to a downturn in the outlook for crude oil demand caused by the spread of the Omicron variant of the novel coronavirus, which has become a new source of concern.

In the foreign exchange market, while the Dollar Index fell slightly to 96.25, the euro rose by about 100 pips against the U.S. dollar, from 1.120 to 1.133.However, from a technical perspective, the pair has been capped by the 120-period moving average on the 4-hour chart and has since pulled back. Therefore, while acknowledging the strength of the U.S. dollar, we should carefully assess whether this rebound will continue.

Today, at 16:00, Turkey’s trade balance; at 18:30, the UK’s mortgage approvals; at 22:00, Germany’s consumer price index (flash estimate);at 10:30 p.m. Canada’s third-quarter current account balance, at midnight U.S. pending home sales, at 12:30 a.m. the U.S. Dallas Fed Manufacturing Activity Index, at 2:15 a.m. the EU’sRemarks by ECB President Lagarde; at 28:00, remarks by BOC Governor Maclean; at 29:00, remarks by NY Fed President Williams; and at 29:05, remarks by Fed Chair Powell are scheduled.We will carefully assess how the market will unfold over the remaining two days of November.