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Traders were in risk-off mode once again this week thanks to rising pandemic fears, ramping up volatility and supporting safe haven assets in the process.

As usual, the Japanese yen and Swiss franc were big winners while the Aussie was the biggest loser at the Friday close.

Notable News & Economic Updates:

U.S. to restrict travel from South Africa and 7 other countries on Monday as Omicron variant emerge

Grayscale launched a new Solana Trust; Shiba Inu spike higher on Tuesday as Kraken announced SHIB listing

Equities dropped to session lows on Tuesday after Fed Chair Powell mentions speeding up taper even amid omicron threat

JP Morgan Global Manufacturing PMI ticked lower to 54.2: “Global manufacturing output rises again but price and supply shortage measures stay close to recent highs”

Euro zone inflation hits record high of 4.9%, the highest level in 25 years

OPEC+ sticks to planned supply hike but adds a get-out clause based on Omicron developments

SEC rejects WisdomTree’s application for spot Bitcoin ETF

Eurozone services PMI rose to 55.9 in November vs. 54.6 in October

U.S. job growth rate falls in November: 210K vs. 550K forecast; Unemployment rate dips further to 4.2%

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, says that it’s a certainty we’ll see more cases of Omicron

Intermarket Weekly Recap

Dollar, Gold, S&P 500, Oil, Bond Yield, Ether Overlay 1-Hour
Dollar, Gold, S&P 500, Oil, Bond Yield, Ether Overlay 1-Hour

Last week’s negative sentiment sparked by the rise of the Omicron variant spilled over into this week, and seemed to strengthen as the week rolled on. Despite there being no hard evidence yet of the variant being more deadly that previous variants, headlines of new cases, a higher transmission rate  and rising lockdown protocols was enough to push traders to unload risk assets.

Another likely contributor to risk aversion sentiment was Fed Chair Powell’s surprise statement on Tuesday that the tapering process may accelerate to combat the high rates of inflation. Economic updates may have also contributed as the latest round looked arguably net negative, especially with the latest business surveys universally signaling less optimism in November vs. the previous months, mainly due to supply chain issues and inflation.

All put together, it’s no surprise that we saw oil, equities and bond yields turn lower after Monday’s short-lived bounce. Gold also turned lower this week despite the high inflation fears, while bonds and safe haven currencies found a bid due to the risk-off environment.

Crypto assets were a bit of an outlier as Ether broke higher this week, arguably attributed to the rapidly growing decentralized finance space.  This was characterized by other layer-1 players with big DeFi ecosystems like Solana and Terra staying mostly in the green. Bitcoin was a laggard relative to the top tier crypto assets, possibly with the help of another U.S. bitcoin ETF rejection by the SEC.

Major currency price action played out as expected given the risk aversion environment, with the Swiss franc and Japanese yen drawing in buyers as pandemic fears intensified. The Aussie dollar was the biggest loser, not only buckling under the broad risk-off market vibes, but also on a negative round of headlines from Australia as third quarter GDP came in negative and a rise in border restrictions to combat the Omicron variant.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

U.S. Pending home sales rose 7.5% m/m in October

Biden says he doesn’t expect more travel restrictions or lockdowns as omicron Covid variant spreads

Fed Chairman Jerome Powell retires the word ‘transitory’ in describing inflation

U.S. House Prices Are Up 18.5%, Reports FHFA

ISM Manufacturing PMI rises to 61.1 in November as expected

ADP National Employment Report: Private Sector Employment Increased by 534,000 Jobs in November

Fed’s Mester open to faster taper to win space for rate hike

U.S. jobless claims: 222K, up 28K from previous week

House strikes deal to avoid a government shutdown one day before deadline

U.S. Senate passes bill to avert government shutdown, sends to Biden for signature

FOMC’s Quarles: Fed would have to consider rate hikes if inflation remains above 4% by next spring

IHS Markit US Services PMI dips to 58.0 in November vs. 58.7 in October

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart

UK mortgage approvals slide to 67K in October, the lowest since mid-2020 – BoE

BoE’s Bailey says economic impact of COVID remains strong

UK house prices hit 10% y/y in November; 0.9% m/m

U.K. Services PMI in November: 58.5 vs. 59.1 in October; “New business growth hits five-month high despite surging
price inflation”

Bank of England member Michael Saunders, a known policy hawk, says he may pause on rate hike vote due to Omicron

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

ECB doesn’t need to intervene on inflation for now, Panetta says on Monday

German inflation surges to 6% as ECB insists spike will pass

French inflation hits 3.4%; highest rate in more than a decade

Eurozone PPI at 5.4% m/m in October, 21.9% y/y

Eurozone Retail sales rose 0.2% in October, below expectations

German services PMI was slightly up in November to 52.7 vs. 52.4 in Oct.

France services PMI rose to 57.4 in Nov. from 56.6 in Oct.

ECB likely to avoid a long-term policy commitment in December given pandemic developments and high inflation reads -Lagarde

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart

Switzerland November manufacturing PMI 62.5 vs 64.4 expected

Swiss retail trade sales: +0.6% in October

KOF Swiss Economic Barometer slips to 108.51 vs. 110.2

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Forex Chart

Canada Industrial Product Price Index (IPPI), increased 1.3% m/m in October and 16.7% y/y; RMPI was up by 4.8% m/m in October, following a 2.4% m/m increase in September

Canada GDP grew by 5.4% in the third quarter of 2021, better than 3.0% forecast

Canada Building Permits Rise 1.3% m/m in October

Canada employment rose by 153K in November, much higher than 37K expected growth; Unemployment rate fell from 6.7% in October to 6.0%

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

New Zealand building permits drop 2% in October (-1.9% in September, +10.5% y/y)

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart
Overlay of AUD Pairs: 1-Hour Forex Chart

Australian building approvals slumped 12.9% vs. projected 1.4% dip

Australian private sector credit rose 0.5% vs. 0.6% forecast

Australia’s AIG manufacturing PMI shrugs off Delta-related lockdown in November

AU GDP contracts by -1.9% q/q in Q3 2021, the first contraction since Q2 2020 but better than the expected 2.7% dip

Australian trade balance narrowed from 11.82B AUD to 11.22B AUD

Australia’s retail sales rose by another 4.9% as expected

Australia tightens internal borders to curb spread of Omicron

Australian Service sector exhibits faster expansion , from 51.8 in Oct. to 55.7 in Nov.

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

Japan reinstates ban on entry of foreign visitors as Omicron spreads

Japanese manufacturing PMI rose to 54.5 in November

Japan’s Q3 capex growth slows to -2.6% q/q as supply constraints hit

As Omicron risks grow, BOJ in no hurry to boost stimulus, says policymaker Adachi

BOJ member Hitoshi Suzuki signals a chance of ending pandemic-relief programs

Japan services sector grows at fastest pace since 2019 in November to 53.0 vs. 50.7 in October