US Open Note – US futures extend gains, dollar retreats on strong risk-on sentiment



US dollar and cable slip; Euro, loonie and aussie storm higher

The dollar is edging lower for a second consecutive day, pressured by the positive risk tone in the markets. However, attention is now shifting to the CPI reading on Friday, where a stronger-than-expected inflation figure might lock in the acceleration of the Fed’s tapering program, underpinning the greenback’s prospects.

The euro is marching higher today without any major headlines supporting its move, mainly benefiting from most major currencies’ setbacks. The Australian dollar is also appreciating as commodity prices climb.

The Canadian dollar is trading higher ahead of the BoC monetary policy decision later today, capitalizing on the recent solid Canadian data, surging oil prices and soaring risk appetite. Markets anticipate that the BoC will leave rates unchanged at 0.25%, but the meeting will be closely eyed on whether the BoC officials will signal an earlier rate hike than the latest guidance stated.

On the other hand, the Japanese yen and Swiss franc are inching lower today as the rebound in investor sentiment has curtailed their safe haven demand. Moreover, the British pound is plummeting in the current session after new emerged that the UK government is ready to impose stricter restriction measures to tackle the imminent Omicron variant spread.

Wall Street extends gains as Omicron fears diminish

Despite the weakness observed early in the current session, e-mini futures for the major US indexes recovered and powered ahead after Pfizer announced that three doses of its vaccine entirely neutralize the Omicron variant. Dow Jones, Nasdaq and S&P 500 futures are up 0.3% on the day, whereas major European indexes have slipped into the red after a positive start.

Oil surges; gold retreats

Oil prices are resuming their rally in the current week as markets and investors continue to downplay the impact of the Omicron variant on the global oil demand. Despite the softer dollar, and increasing geopolitical tensions, gold is experiencing a minor pullback in today’s session mainly due to the improving risk sentiment in global markets.

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