Dollar slips ahead of FOMC; euro and pound hold firm; safe havens shine
The dollar is softer on the day despite surging Treasury yields and soaring risk-off sentiment in global markets triggered by the resurgence of Omicron jitters. However, the driving force behind this pullback might be a report published earlier in the session, which suggests that two doses of the Pfizer vaccine provide 70% protection against the new Omicron variant. The US producers pricing index is reported later today, but it is unlikely to have any impact on the dollar.
Although the ECB is expected to stick to the dovish rhetoric at its Thursday meeting, the euro is trading higher in the current session. In addition, the British pound is in the green, with the solid UK jobs report that came out earlier today underpinning the currency’s prospects. Nevertheless, the upside potential is limited as the BoE is anticipated to delay its upcoming rate hike to February 2022 due to the Omicron variant outbreak in the UK.
The Swiss franc is appreciating today, capitalizing on surging risk aversion, while the Japanese yen paired part of its early-session gains. Moreover, the commodity-linked currencies are flat in the current trading session.
Stock markets grapple with Omicron fears
The outlook for equity markets is relatively mixed today. Wall Street is set to open lower today as e-mini futures for the major US indices are taking a hit in premarket trade. More specifically, Nasdaq and S&P 500 futures are down 0.5% and 0.2% respectively, while Dow Jones futures are flat.
On the other hand, major European indices kept a slightly more positive tone but have not yet managed to recover yesterday’s losses.
In individual equity news, Elon Musk has accelerated his disposal of Tesla shares to cover taxes on the exercise of 2.1 million options, according to regulatory filings.
Gold and oil dip
Gold is trading lower today despite the prevailing risk-off sentiment and the weaker dollar, heavily pressured by soaring Treasury yields. Furthermore, oil prices are also plummeting in the current session as fears over the Omicron variant are posing a threat to the demand side.