As we approach the end of 2021, there is a bit of light at the end of the tunnel for Covid-19. Our body's immune system will hopefully be able to fight off the severe infections once the initial observation made by the South African scientists is confirmed. This optimism should stop long-lasting lockdowns from being imposed and that is good for the global economy.
The forex heatmap shows a shift from safe-haven currencies to commodity pairs at the start of the European session. During holiday-thin trading in the Asia-Pacific session, the yen fell to a new one-month low, and sterling jumped to six-week highs. The move into higher-risk currencies could be down to many governments resisting imposing new, widespread lockdowns in the face of the continuing epidemic, even as the Omicron variant of Coronavirus surged.
South African studies into the Omicron virus are awaiting peer review but do suggest that the dominant variant is being managed by T-cells within the immune response of those with natural immunity or who have been vaccinated. This could be the reason for the discrepancy between the number of infected and the number of severely ill.
The USDJPY touched 115.21, its highest in a month and not too far from its November highs of 115.51. After selling $56 billion in seven-year notes to weak demand, yields of the benchmark 10-year US Treasury note rose to 1.56% yesterday, the highest since November 29th.
End-of-year house prices in the UK are at a record high, with an annual price increase of double digits. The annual growth rate of house prices increased to 10.4%, up from 10.0% in November 2021, which was the strongest year since 2006. Over the past year, the average price of a home in the UK reached a record high of £254,822, as residents looked for properties outside of high-density areas. Wales had the best performance in 2021, while London had the worst.
During the last six weeks, sterling rose as high as $1.3505 before meeting resistance and declining this morning.
The Antipodeans are moving higher with the Australian dollar inching higher to $0.72585, which will bode well for the equities markets and a risk-on trading day.
During the Asia-Pacific session, oil prices rose but remained within a range when trading began in London. Despite soaring Coronavirus infections in the US, oil prices have advanced for several consecutive days.
On January 4th, OPEC+ will meet to decide whether to continue increasing output in February. Saudi Arabia's King Salman said on Wednesday the OPEC+ production agreement was "essential" to oil market stability and stressed the need for producers to comply with the pact. Oil prices have risen by nearly 60% in 2021 as global fuel demand has surged back to pre-pandemic levels and deep production cuts by OPEC+ producers have erased the supply glut that was weighing on the market.