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Omicron narrative drives markets

Tuesday 21 December, 2021

Daily Currency Update

The US dollar staged a slight recovery on Tuesday morning after losing ground to its major peers overnight. The safe-haven US dollar took a hit at the start of the week as several countries re-imposed restrictions due to the Omicron variant, which fueled investor concerns about the near to medium term economic outlook. The US Dollar Index was sitting around 96.50 at the time of writing.

Key Movers

The German government said it would restrict private gatherings of vaccinated and recovered to 10 people max from 28th December onwards. In the UK, reports continued to swirl around new measures being introduced after Christmas to curb the spread of the Omicron variant. EURUSD erased its early gains and was slightly down this morning trading around 1.2628, while GBPUSD rebounded from yesterday sitting around 1.3235 at the time of writing. With little of note on the macroeconomic docket and liquidity evaporating in the lead-up to Christmas, we expect ranges will be well confined with breakouts driven by the evolving Omicron narrative.

Expected Ranges

  • EUR/USD: 1.1262 - 1.1301 ▼
  • GBP/USD: 1.32 - 1.3258 ▲
  • AUD/USD: 0.7102 - 0.714 ▲
  • USD/CAD: 1.2921 - 1.2961 ▼
  • USD/MXN: 20.7119 - 20.827 ▼