Investors
are still afraid of the COVID-19 omicron variant as lockdowns spread across
Europe. The United Kingdom is looking to introduce a step 2 lockdown measure as
the omicron variant cases surge above 93,000 daily. The Netherlands has been in
a similar lockdown as the one established in spring 2020 since December 14.
Fears of a
new wave of lockdowns in other European countries made investors nervous as it
may be followed by a severe impact on the global economy. Crude prices fell by
5.0% while stock indices in the United States lost 1.0-1.2%.
The World
Health Organisation (WHO) calmed down investors during a special press
conference on December 20 when WHO Director General Tedros Adhanom Ghebreyesus
said that the year "2022 must be the year we end the pandemic". That
statement impressed investors and the stock market rebounded globally. On
Tuesday Hang Seng rose by 1.0%, the Japanese Nikkei 225 added 2.08%, Brent
crude rose by 1.19%. U.S. stock indices opened higher by 0.8-0.9%.
On Thursday
the only important data to be published will be the November Personal Spending
index. So, there are no visible hurdles to limit the rise of the S&P 500
broad market index to 4670 points. It is important that the
index be above the support level of 4580
points, and that no new lockdowns in Europe should be reinstalled. Otherwise,
the S&P 500 index is likely to drop to 4500 points.
Crude prices almost
regained their huge 5% drop on Monday. Brent crude prices returned to the $73
per barrel area. The next target is at $72.60-73.00 per barrel. However, if
prices fail to reach this target prices may drop to $69.00-70.00, which is a
strong support level.
Gold prices went
sideways around $1800 per troy ounce. Though gold is likely to move to the
downside at $1550-1650 per ounce, such a scenario has limited time to become a
reality. If gold prices remain above $1750 per ounce until January 15 they may
resume the upside movement towards $1830-1850 per ounce in January and
February, and only after reaching it will prices roll back to $1550-1650 per
ounce.
EURUSD has failed to
touch the 1.13900-1.14000 landmark last week. Reaching this landmark would
enable the Euro to continue rising, but now it is likely to fall to
1.12000-1.12200. However, the pair has no directional movements that would
provide good opportunities to open any positions. So, it would be better to
leave EURUSD behind this week.
GBPUSD was
hammered by the pandemic in the United Kingdom as the omicron variant has
reached a new record number of cases. The pressure on the Pound forced GBPUSD
to decline and the pair may continue to keep to the downside this week.
However, the Pound may temporarily rebound to 1.32600-1.32700 to drop back to
1.32200.