US Open Note – Omicron variant continues to cast a shadow over markets

Dollar edges lower ahead of US jobs report

The US dollar was trading without a clear direction on Thursday, as the markets continue to digest Fed Chair Jerome Powell’s hawkish shift and recent Omicron variant developments. Further hawkish remarks from Cleveland Fed President Loretta Mester, who is an FOMC voter next year, were unable to boost the dollar.

All eyes will fall on the upcoming jobs report set to be released on Friday. Positive data could encourage traders’ speculation over three rate hikes next year, reigniting the US dollar’s positive momentum. Better-than-expected weekly US jobless claims released earlier today suggest the labor market is in pretty good shape.

In the rest of the FX arena, the biggest winner was the British pound, which rose by 0.43% against the greenback to $1.3323, while versus the euro, sterling was relatively flat. The common currency ticked up by 0.31% against the dollar as the Eurozone's unemployment rate continues to creep lower.

Meanwhile, the Turkish lira recorded further losses against the dollar on Thursday, after President Recep Tayyip Erdogan replaced his finance minister who reportedly opposed his demands over lower borrowing costs.

Omicron variant weighs on US equities

Major US indices finished in the red for a second consecutive day on Wednesday, erasing early session gains as investors monitored mixed pandemic headlines. Sentiment was first lifted after the World Health Organization remarked that current vaccines would likely offer protection against the Omicron strain. Yet, uncertainty prevailed as the first case of the new variant was detected in America.

On Thursday, US stocks are headed for a positive opening amid the approval of GlaxoSmithKline’s drug by UK regulators, which appears to be effective against the recently discovered mutation. The S&P 500 and Dow Jones futures rose by 0.25% and 0.60%, respectively at the time of writing. In contrast, the tech-heavy Nasdaq 100 is set for a 0.20% loss at the market’s opening bell.

In the commodity market, WTI crude oil slipped by 0.10% after headlines stating that a senior OPEC source suggested the cartel is likely to stick with the existing output plan. If indeed OPEC announces that it will proceed with raising supply as planned, oil prices could take a further hit.

Apple faces downward pressures

Apple’s share price is down by almost 3% in pre-market trade amid reports claiming that the tech-giant has warned its component suppliers about slowing demand for the iPhone 13 ahead of the holiday season. Moderna was the S&P 500 index’s worst performer during yesterday’s trading session, tumbling by 12% after losing an appeal, which could open the door to a patent infringement suit over its coronavirus vaccine.

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