Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Dollar Unfazed By Omicron, Looks Ahead To NFP

By Kathy LienForexDec 03, 2021 06:52
ph.investing.com/analysis/us-dollar-unfazed-by-omicron-looks-ahead-to-nfp-98267
U.S. Dollar Unfazed By Omicron, Looks Ahead To NFP
By Kathy Lien   |  Dec 03, 2021 06:52
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Health experts around the world are worried about Omicron, but investors are not – at least that’s what the 2% rally in stocks and rebound in the U.S. dollar suggests. 
 
Everyone knew that the first cases of Omicron showing up in the U.S. was only a matter of time. And having lived through the original strain along with three variants this year – Iota, Alpha and Delta – investors don’t see Omicron derailing the global recovery. There’s no doubt that consumer spending and growth will slow, especially if more countries announce restrictions. But vaccination rates are high and politicians in the U.S. have little appetite for lockdowns. It may be weeks before we know just how bad Omicron is (or is not). And until the danger becomes clear, investors will focus on the certainties, which are the U.S. market is strong and the Federal Reserve is worried about inflation and ready to reduce stimulus at a faster pace in response. 
 
The November non-farm payrolls report is scheduled for release tomorrow, and all signs point to another good jobs report. Not only did jobless claims rise less than expected for the week ended Nov. 27, but the four-week moving average dropped to its lowest level since March 2020. Continuing claims also fell below 2 million for the first time since the pandemic. Layoffs are at their lowest level in 28 years, with employers struggling to find workers. Economists are looking for non-farm payrolls to rise from 531,000 to 550,000. And if job growth meets or beats expectations, the U.S. dollar will rise. A tight labor market is one of the main reasons why the Fed is worried about inflation because higher wage demand can stoke inflation. While it can be argued that Omicron could ease demand, there’s evidence that the Delta variant made supply-chain problems worse, not better. 
 
A good jobs report also reinforces the Federal Reserve’s plans to accelerate the pace of tapering at its Dec. 14-15 policy meeting. With both Chair Jerome Powell and Treasury Secretary Janet Yellen saying it is time to retire the word transitory this week, inflation projections are likely to be increased, and the dot plot should show policy-makers in favor of an earlier rate hike. All of this is positive for the greenback. Hawkish central banks, like the Reserve Bank of New Zealand, don’t see Omicron changing their economic outlook. 
 
If we are wrong and Omicron proves to be more deadly than the other variants, foreign nations will lock down activity quicker than the U.S., which will drive those currencies lower initially. The U.S. dollar sold off sharply on the initial Omicron news, but other currencies have also struggled to rally, with some heading back towards multi-month lows. 
 
Canada also releases labor market numbers tomorrow. Like the U.S., job growth is expected to improve, but only moderately. USD/CAD rose to two-month highs today on the back of U.S. dollar demand. The recent decline in oil prices has also weighed heavily on the loonie. 
 
Next to the U.S. dollar, the best-performing currency today was sterling, while the worst were the euro and the Australian dollar. Eurozone data was better than expected, with producer prices rising sharply in October and the unemployment rate falling. Unfortunately, Omicron is ripping across Europe, and European nations are far more likely to respond with tight restrictions. Weaker Australian trade data and an unexpected decline in home loans drove AUD lower against all of the major currencies. NZD, in contrast, held steady after the RBNZ said Omicron isn’t likely to change its outlook.
U.S. Dollar Unfazed By Omicron, Looks Ahead To NFP
 

Related Articles

U.S. Dollar Unfazed By Omicron, Looks Ahead To NFP

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email