Weekly Recap 22-26 November

Financial markets were calm last week due to the Thanksgiving holiday in the United States, and investors were cautious due to the emergence of the new Coronavirus mutant in South Africa and the Uk.

Gold

During the past week, the safe haven fell due to the growing strength of the dollar, which pushed the US currency towards its highest levels in more than 16 months, and despite the strong decline in risk appetite, which led to the Dow Jones index closing down more than 900 points, but gold could not Staying above $1,800 an ounce.

The yellow metal lost nearly $70 during last week’s trading, down from $1860 an ounce to nearly $1,790 during Thursday’s trading, and closed Friday at $1,788 an ounce.

Gold also did not move after the Federal Reserve’s meeting minutes, which indicated the possibility of monetary policy tightening faster than previously expected.

US

US stock indexes fell on Friday, as travel-related, banking, and commodity stocks bore the brunt of a sell-off triggered by discovering a new and potentially vaccine-resistant variant of the coronavirus.

Wall Street lenders Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, Wells Fargo, and Morgan Stanley fell between 3% and 4% as investors cut bets on a faster US interest rate hike.

The volatility index, known as Wall Street’s fear gauge, jumped to its highest level since Sept. 20. Rising US inflation, combined with strong economic data and the renaming of Jerome Powell as Fed Chair by President Joe Biden, has prompted market participants to raise their bets about rising rates earlier than expected.

USD

The main dollar index rose strongly against a basket of 6 currencies to levels of 96.8, compared to trading at levels of 95.6 at the beginning of the week’s trading.

The dollar fell marginally during Thursday’s trading, moving away from its highest level in 16 months, after the release of the minutes of the Federal Reserve meeting and rising expectations about an adjustment in the pace of asset purchases in light of continued price pressures.

But with the new strain of Coronavirus, omicron, the US dollar closed Friday’s trading at the level of 96.078, down by 0.82%.

Analysts at Goldman Sachs expected the Fed to double the pace of reducing its bond-purchasing program to $30 billion per month starting in January, with the program ending by mid-March.

TRY

On Tuesday, the Turkish lira recorded a historic decline of nearly 20% to levels of 13.5276 lira/dollar, reaching its lowest level ever.

Since the end of January 2021, when the lira was trading at levels of 7.3099 lira/dollar, the Turkish currency fell by more than 85%, becoming the worst-performing emerging currency against the dollar.

Omicron

Britain said that it will hold an emergency meeting of health ministers of the Group of Seven countries on Monday to discuss developments related to the new mutation of Corona Omicron.

Britain announced new measures in an effort to slow the spread of Omicron by tightening rules for travelers coming to Britain and making it mandatory to wear masks in retail places and public transport in England.

Moderna’s chief medical officer, Paul Burton, said the vaccine manufacturer could release a reformulated vaccine against Omicron, as early as next year.

It is not clear whether new formulations are needed, or whether current corona vaccines will provide protection against the new mutation that is beginning to spread around the world.

The World Health Organization has said that the new strain, called Omicron, may spread more quickly than other strains and that preliminary evidence indicates an increased risk of transmission.

Epidemiologists have warned that travel restrictions may be too late to stop the global Omicron outbreak.

The new strain was first discovered in South Africa and was later detected in Belgium, Botswana, Israel and Hong Kong.

A senior official in President Joe Biden’s administration said the United States would impose travel restrictions on South Africa and neighboring countries starting Monday.

After Britain, the European Union, and other countries imposed a ban on flights, Canada said it would close its borders to travel from those countries.

However, it may take weeks for scientists to understand the mutations of the new strain and whether current vaccines and treatments are effective against it.