It’s a relatively quiet start to the week before the expected onslaught of central bank meetings that will take place this week. On Monday, US futures gained along with European stocks as traders braced for a week of central bank decisions amid fears about inflation and the omicron virus.
Fed, ECB and BoE meetings in the spotlight this week
The Federal Reserve is anticipated to accelerate its stimulus withdrawal on Wednesday and could pave the way for quicker interest rate hikes in 2022 if price pressures remain around a four-decade high. The US dollar index today is moving up above 96.72, while dollar/yen is struggling to surpass the 20-day simple moving average (SMA).
The euro has remained around $1.1300 since mid-November, ahead of this week’s meeting of major central banks, including the ECB. Eurozone policymakers are expected to decide on the future of the bond-buying program. Elsewhere, fears over Europe’s faltering economic recovery have grown as the area grapples with rising energy prices and new Covid regulations.
These restrictions are causing traders to reduce their wagers for an increase in interest rates by the Bank of England next year. A “tidal wave” of omicron infections in the UK has prompted Prime Minister Boris Johnson to set an end-of-year deadline for the country’s booster immunization campaign. Pound/dollar today is ticking slightly higher, reaching 1.3250 and pound/yen is flirting with 150.60.
Turkish lira plunges; gold and oil struggle around 200-SMA
In other markets, the Turkish lira fell to an all-time low of 14.6180 per dollar today, as the country’s central bank was expected to lower interest rates further. Pressured by Turkish President Tayyip Erdogan, the TCMB is expected at Thursday’s policy meeting to decrease the policy rate by 100 basis points to 14%, in order to promote a new economic plan that prioritizes growth, output, exports, and credit.
Elsewhere, WTI oil prices eased around the 200-day SMA near $71.00/per barrel as concerns about the omicron variant and its impact on global growth are affecting the commodity. Gold is trying to hit the $1,800/per ounce again, but the 200-day SMA acts as a strong resistance level near $1,792/per ounce.
