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Gold was among the best performers, advancing for a second consecutive day and currently trading around $1,795 a troy ounce. Crude oil prices were also up, with the barrel of WTI currently trading at $72.50.
European indexes posted substantial gains, but Wall Street was unable to follow the lead, and traded mixed. US Treasury yields spent the day consolidating, showing little reaction to central banks’ news.
Meanwhile, multiple countries continue to report record cases of coronavirus contagions, related to the Omicron variant. Tighter measures are being imposed in places such as the UK and South Korea, to try to curve the spread and prevent the collapse of health systems.
Economic Data
There were 206,000 initial claims for unemployment benefits in the US during the week ending December 11, data published by the US Department of Labor (DoL) revealed on Thursday. This reading followed last week’s print of 188K (revised up from 184K), which was the lowest reading since 1969, and came in a tad above market expectations for 200K. Continued jobless claims fell to 1.845M in the week ending December 4, the data showed, below expectations for a drop to 1.936M from 1.999M the previous week.
Philly Fed manufacturing index has slided in December amid elevated inflation. The Federal Reserve Bank of Philadelphia said Thursday that is gauge of regional business activity fell to 15.4 in December from 39.0 in the previous month. Any reading above zero indicates improving conditions. Economists expected a 30.0 reading, according to a Wall Street Journal poll.
Major Developments
On Thursday, global central banks’s marathon has come to an end for 2021. Less than 24 hours after the US Fed’s policy announcement on Wednesday, the Swiss National Bank, the Bank of England and the European Central Bank, have announced their monetary policy decisions. All of them, with the exception of the Swiss SNB, announced tighter monetary policies.
The European Central Bank announced a cautious taper pretty much in line with the market’s expectations.
The ECB kept rates on hold and confirmed the Pandemic Emergency Purchase Program will end in March 2022. The Government Council also decided to expand its Assets Purchase Program to EUR 40 billion per month in the second quarter and to EUR 30 billion in the third quarter, to partially compensate the end of the monthly EUR 60 billion bond-buying through PEPP
The Bank of England Monetary Policy Committee voted by a majority of 8-1 to increase the benchmark rate to 0.25% and by a majority of 9-0 to maintain the amount of quantitative easing at £895b.
The SNB maintained its expansionary monetary policy to ensure price stability, and support the local economy in its recovery from the impact of the coronavirus pandemic. It is keeping the SNB policy rate and interest on sight deposits at SNB at −0.75%.
Turkey’s central bank cut the main interest rate to 14% from 15%, pushing TRY to a new record low of 15.74.
The EUR/USD pair peaked at 1.3360, while GBP/USD reached 1.3374. Both retreated during US trading hours, to settle at 1.1320 and 1.3310 respectively. The AUD/USD pair trades around 0.7180 down from the 0.7220 region. The aussie benefited from upbeat local employment figures. The USD/CAD pair is down to 1.2780.
Finally, the USD/JPY pair trades at 113.70 ahead of the Bank of Japan monetary policy decision, widely anticipated to remain on hold.
“Omicron is here and going to start spreading more rapidly”, said US President Joe Biden while speaking from Roosevelt Room in the White House.
US looking at a winter of severe illness and death for those not vaccinated against COVID-19. “It’s past time for people to get booster shots, which they should do as quickly as possible”, added Biden.
The UK reported, unfortunately, another day of record-breaking covid infections with a daily count of 88,376 new coronavirus cases.
Omicron fears were partially behind the major central banks’ that have recently tightened their monetary policy stance, which in turn challenge those who opted to remain optimistic.
Also Read:
Oil Extends Gains On Dropping Stockpile, Weaker Dollar
Former Treasurer More Optimistic About US Economy In 2022
EUR/CHF Lower After SNB, ECB Monetary Policy meetings
Pound Surging Higher On Surprise Rate Hike
US Trucking Action Plan Launched Amid Labour Shortage
Fed’s Statement Signals Inflation Threshold Met
Wells Fargo: US Industrial Production Not Getting Worse
Another Rate Hike Coming Early Next Year By Bank of England
Lagarde Itroduces Changes To QE Programmes
Most Treasury Yields Decline, Investors Digest Fed’s Decisions
US Stocks Jump, Apple Nears New Milestone
Evergrande Stuck By Lawsuits, Investors’ Bargaining
