November 29, 2021

“As countries work to tighten restrictions to contain the spread of the Omicron variant, the safe haven dollar strengthened amidst a period of uncertainty. Analysts have warned of increasing  uncertainty over when the Federal Reserve will raise interest rates, Omicron clouds the global economic outlook.”

Tim Hallinan, Trading Director

Main Headlines

Even though higher prices and smaller discounts dominated the retail industry over Black Friday, US shoppers still spent heavily. As of Friday afternoon, in store sales were up 42.9% from last year and total retail sales, not including cars, rose by 29.8%. Many believe this continued spending is propelled by supply chain fears. According to Adobe Analytics by Friday evening consumers had spent $6.6bn in online sales and Thursday’s Thanksgiving holiday totalled $5.1bn. However, this data also marks the first time in years retail sales, or online sales, did not increase from the previous year.

As the new Omicron coronavirus variant continues to spread across the world, today Ministers in the UK are set to outline legislation which would increase anti-Covid measures. The new variant poses a danger as it is unclear how effectively vaccines work against it. While some are calling for a vote on the proposals on Tuesday, others believe the measures are vital to contain the spread of the virus. There have been nine confirmed cases in the UK over the weekend but many more are being treated as suspected cases. The updated rules call for face masks to be mandatory in public transport and other public settings from 4am on Tuesday. They also require anyone entering the country to take a PCR test within two days and isolate until they receive a negative result.

GBP

Sterling is lower against the dollar and higher against the euro this morning.  In a move which is seen as challenging the cautious leadership of Nicola Sturgeon, SNP party delegates have called for preparations to begin for a central bank to be set up after independence from the UK. Despite Scotland’s first minister stating that it would continue to use the pound for as long as necessary, members want a commitment to a new Scottish currency. According to the accountancy firm Crowe, 2-10% of spending could be lost to fraud in the Conservative’s £100bn-a-year infrastructure drive. This could amount to as much as £10bn a year and was published with the understanding that large scale projects in the construction sector are particularly prone to corruption.

EUR

The Euro is weaker against most major currencies in early morning trade. Shortly after the European Commission outlined plans to create US-style central databases of trading information, they ran into opposition from various banks and exchanges. While some questioned whether the proposals would function as planned, others suggested the consolidated tape proposed could be detrimental to investors. The migrant crisis continues to dominate Europe. Yesterday, EU ministers met in Calais and called for a new agreement with the UK to tackle the surge of migrants trying to cross the Channel to England from France. The meeting comes days after the French president withdrew Priti Patel’s invitation to the event, over clashes in dealing with the crisis.

USD

The dollar was well bid against most major currencies overnight. The President is set to update the nation about the Omicron variant today. Despite there being no cases of the new Omicron variant in the US, health officials are warning it is already likely in the country as they encourage everyone to follow mask-wearing procedures and get vaccinated. Starting today, the US has banned the entry of anyone from South Africa, Zimbabwe od six other African nations. Elsewhere, funding for current government programs is set to run out after Friday, giving lawmakers a couple of days to pass legislation to stop this. While Republicans are seeking an extension of government funding which lasts into 2022, Democrats are suggesting extensions to a December 17^th deadline.

Markets

Asian stocks fell but the moves were smaller than during Friday’s global equity selloff, which wiped out more than $2 trillion in market value. U.S. and European equity futures climbed Monday along with crude oil and Treasury yields as investors tried to calibrate economic risks from the omicron coronavirus strain. S&P 500, Nasdaq 100 and European contracts jumped, WTI oil rallied back above $71 a barrel and the 10-year U.S. Treasury yield rose past 1.50%. The euro slipped and a dollar gauge ticked up. In cryptocurrencies, Bitcoin climbed and was trading around $57,400, after sinking below $54,000 on Friday.

Main Economic Data/ Central Banks/ Government (All Times CET)

8:00 a.m.: Turkey Oct. trade balance

9:00 a.m.: Spain Nov. CPI

9:15 a.m.: ECB’s de Cos speaks; ECB’s Villeroy speaks

9:30 a.m.: Sweden 3Q GDP; Oct. trade balance

10:30 a.m.: U.K. Oct. mortgage approvals

12:00 p.m.: Ireland Oct. retail sales volume

2:00 p.m.: Riksbank’s Skinsgsley on panel

2:00 p.m.: Germany Nov. CPI

Corporate Events

Earnings include Faraday Future, Gazprom PJSC, Li Auto

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