Wall Street set for a steady open, COVID treatments purchases boost sentiment, US data, CNB delivers larger hike, bitcoin struggles to recapture USD 50K

US stocks were headed for a flat open, following efforts from the US and UK to secure COVID treatments. Trading volumes will continue to fall heading into the holiday weekend, but risk appetite will struggle to deliver a significant stock market rally as the Omicron variant still poses a major risk for many healthcare systems.

US Treasury yields inched higher with the yield curve most likely waiting until the New Year before steepening.

COVID

The next battle in the war against COVID has both the US and UK rushing to secure supplies in COVID treatments.  The Biden administration is expected to acquire 4 million courses of COVID-19 treatments by the end of January, while the UK secured 1.75 million courses of Merck’s COVID pill and 2.5 million courses of Pfizer’s COVID treatment.  Omicron has shown that unvaccinated individuals are still a significant portion of the population amongst heavily vaccinated countries and that hospital capacity is rapidly disappearing.  Germany is concerned that the current surge could eventually test its healthcare capacity.

In the US, a return to lockdowns seen earlier in the pandemic is unlikely, but the US consumer will be weaker as many Americans won’t have the same benefits if their jobs have tentative closures.

Madrid is battling a record number of daily COVID infections and could face similar restrictions announced earlier in the week in Catalonia.  China’s Xi’an reported 52 Covid cases and that will likely lead to further restrictive measures.

The annual Consumer Electronic Show (CES) in Las Vegas is still going to happen, but many key players are pulling out.  The heavily anticipated event that unveils the latest innovation in tech will not see Amazon, Facebook, Twitter, and Pinterest. Earlier in the week, the World Economic Forum postponed the Davos meeting.

The world wants to return to normal, but a return to convention centers and annual showcases will have to wait until after the Christmas surge is over in late January.

US Data

The final reading of third-quarter GDP saw upside revisions across the board, with the headline revised higher from 2.1% to 2.3%.  Personal consumption improved from the preliminary 1.7% reading to 2.0%, while pricing readings edged higher.  This data was old but did confirm the narrative of growth remaining strong and pricing pressures still are approaching their peak.

The Chicago Fed National Activity Index declined more than expected as production and employment indicators decelerated.

Czech National Bank hikes by 1%

The Czech Central Bank (CNB) is aggressively tackling inflation after surprising FX traders with another larger-than-expected rate hike.  The benchmark rate rose 100 basis points to 3.75%, 25 basis points more than the consensus estimate.  The Czech koruna rallied against the dollar and was little changed against the euro.

Cryptos

Bitcoin and ethereum have both entered holiday mode and continue to consolidate around key technical levels.  The headlines have not been inspiring to suggest a breakout could be imminent.  Ethereum’s micro futures contracts on the CME are off to a lackluster start.  Despite ether being all the buzz for the next wave of crypto investors, the uptick with micro ether futures is disappointing as only 115,000 contracts traded in the two weeks to December 17th.

Bitcoin continues to face a wall at the USD 50,000 level and until that level is breached, speculators may remain on the sidelines.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya