December 20, 2021
USD/JPY: The USD/JPY pair hit its daily low at the 113.50 level during the Asian session on Monday. The pair is affected by the risk-off mood in the market, driven by the US Treasury yields and equity futures, amid the Omicron coronavirus variant as well as Fed’s taper and interest rate hike calls. Omicron infections are on a spike in the West, especially in Europe and the UK, which in turn calls for further activity restrictions, which could affect economics more than previous restrictions due to upcoming Christmas holidays. The UK reported a 52% jump in the covid cases while Senior US Medical Expert Anthony Fauci fears more measures to curb the COVID-19 cases. Moving on, a light calendar and year-end holiday mood may restrict USD/JPY moves. However, risk catalysts probably will be able to entertain traders during this and next week.
GBP/USD: GBP/USD is showing a bearish dynamic as well, having reached the low at 1.3233 during the early Asia session. Concerns over the coronavirus spread in the UK and Brexit updates could pressure the cable pair traders despite the Bank of England’s rate hike. It’s also worth noting that the Bank of England’s rate hike portrayed inflation pressure and the fundamental strength of the UK’s economy. However, the fresh talks over the Fed’s rate hike, recently renewed by Fed Board, gain major attention and weigh on the GBP/USD prices. Looking forward, an absence of major events keeps GBP/USD traders pushed towards risk catalysts for fresh impulses.
Gold: Gold prices struggle to keep the biggest weekly gains since early November while taking rounds to $1.800 during the Asian session on Monday. While the US dollar weakness and central-bank actions forced the traders to buy traditional safe-haven assets such as gold, it is also pushing them to additional risk appetite and affect the yellow metal prices. Among the key catalysts of the risky mood are disappointments over US President Joe Biden’s multi-billion-dollars worth of aid package and the jump in coronavirus infections fears, mainly linked to the South African variant, are the latest ones. Also contributing to the risk-off mood could be the fresh talks over the rate hiking by Fed. Given the lack of major data, gold prices are likely to depend on the risk catalysts and the risk-off mood may challenge the bulls.