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European stock markets in Europe ended trading with growth



Markets continue to be heavily influenced by the worldwide spread of the new COVID-19 strain omicron. Investors are closely monitoring the incidence rate in European countries and are worried that new surges could lead to a slowdown in economic activity.

The composite index of the largest enterprises in the region Stoxx Europe 600 climbed 0.6% to 485.49 points. Nevertheless, the value of the index is still below the high of 489.95 points reached on November 17.

France's CAC 40 Index added 0.8%, Germany's DAX Index added 0.5%, while Spain's IBEX and Italy's FTSE MIB gained 0.7% and 0.8%, respectively.

The leaders of growth among the components of Stoxx 600 on Monday came the shares of the Norwegian NEL ASA, working with renewable energy sources (+ 5.6%), the Swiss biopharmaceutical Idorsia Ltd. (+ 4.4%), as well as the Swedish online casino operator Evolution Gaming Group AB (+ 5%).

The stock quotes of the Swiss Roche Holding AG (+ 1.1%) also rose on the news that the US authorities approved the emergency use of the company's home tests for COVID-19, showing the result within 20 minutes.

CNH Industrial N.V., an international industrial group that announced the separation of its truck division Iveco Group, gained 2.7%. Iveco shares will begin trading on the Milan Stock Exchange on January 3.

In addition, shares of the main European technology companies completed trading in positive territory: ASML Holding (+ 1%), SAP (+ 0.7%), Nordic Semiconductor ASA (+ 3.5%) and Infineon Technologies (+ 2.4%) ...

The leaders of the fall in the Stoxx 600 were shares of the Swiss online pharmacy chain Zur Rose Group AG (-2.9%), the Danish energy Oersted A / S (-2.4%) and the operator of the food delivery service HelloFresh SE (-2.1 %).

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US stocks mixed at close of trade; Dow Jones up 0.26%



At the close in New York, the Dow Jones rose 0.26% to a 1-month high, the S&P 500 lost 0.10% and the NASDAQ Composite fell 0.56%.

The leaders of growth among the components of the Dow Jones at the end of today's trading were the shares of Walt Disney Company, which rose 2.40 points (1.57%), to close at 155.20. Boeing Co added 1.46 points or 1.46% to end trades at 206.13. Walmart Inc rose 1.44% or 2.02 points to end at 142.78.

The biggest losers were Salesforce.com Inc, which fell 1.10% or 2.85 points to end the session at 255.45. Nike Inc is up 0.69% or 1.16 points to end at 166.42, while Apple Inc is down 0.58% or 1.04 points to 179.29. ... The top gainers among the components of the S&P 500 at the end of today's trading were Campbell Soup Company, which rose 2.80% to 43.36, Ball Corporation, which gained 2.59% to close at 94.30, and American Airlines Group shares rose 2.04% to end the session at 18.54.

The biggest losers were DexCom Inc, which fell 7.09% to close at 529.50. Etsy Inc shed 3.46% to end the session at 221.73. Penn National Gaming Inc was down 2.89% to 49.34. The leaders of growth among the components of the NASDAQ Composite index at the end of today's trading were shares of Insignia Systems Inc, which rose 64.82% to 19.020, ShiftPixy Inc, which gained 43.09% to close at 1.120, and Pop Culture Group Co Ltd, which were up 35.88% to end the session at 2.31.

The biggest losers were Biofrontera Inc, which fell 29.50% to close at 8.10. Powerbridge Technologies Co Ltd shed 25.45% to end the session at 0.6933. Sensus Healthcare Inc was down 22.67% to 6.310.

On the New York Stock Exchange, the number of securities that fell (1,725) exceeded the number of those that closed in positive territory (1,531), while the quotations of 136 shares remained practically unchanged. On the NASDAQ stock exchange 2,494 companies fell in price, 1,330 increased, and 182 remained at the level of the previous close.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 0.79% to 17.54, hitting a fresh monthly low.

Gold Futures for February delivery was down 0.12% or 2.20 to $ 1.806.60 a troy ounce. Elsewhere in commodities, WTI crude for February delivery rose 0.60%, or 0.45, to $ 76.02 a barrel. Futures contracts for Brent oil for March delivery rose 0.08%, or 0.06, to trade at $ 78.84 a barrel.

Meanwhile, on the Forex market, EUR / USD was up 0.04% to hit 1.1313, while USD / JPY was up 0.00% to hit 114.82.

The US Dollar Index Futures was up 0.08% at 96.165.

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2021 was the best year for the US dollar



Experts agree that this year has been the best for the US dollar, which has not experienced such victory over the past seven years. This currency enters the upcoming 2022 with a reserve of optimism, which it will retain for a long time.

The US currency completed the current year with growth against most of the key currencies. The dollar index, which reflects the USD exchange rate against a basket of six leading currencies, increased 6.8% over the year. Such a sharp growth was shown only by the Canadian dollar due to the increase in oil prices by 50% over the year. According to Saxo Bank analysts, the sustained recovery of the US and Canadian economies will lead to an early rate hike from both central banks. Saxo Bank also believes that the consequence of the Fed's aggressive policy will be the tightening of conditions in the financial markets. If this scenario occurs, the US dollar will outperform other currencies as a safe haven asset.

Experts said that this year was the best for the US currency for the last seven years. The US dollar has shown high efficiency, often holding the leading positions. The surge in inflation, which has not been observed in the United States over the past 40 years, has become the driver of this growth.

At the same time, the US dollar was supported by record investments in it by large hedge funds. This contributed to the rapid growth of the US currency. Moreover, experts consider the doubling of the pace of curtailing the Federal Reserve's asset repurchase program to be the catalyst for the recovery of this currency. The high interest rates and the course for further tightening of the monetary policy provide invaluable support to the US currency.

Amid growing concerns about inflation, the regulator may raise the key rate four times instead of the planned three in 2022. According to experts, a 1% rate hike will start to significantly affect economic activity. Experts expect the first Fed rate increase in March, with a 54% probability. By the end of 2022, the probability of two rate hikes is 90%, and a threefold increase is 66%.

Analysts are sure that the inertia towards the strengthening of the US dollar will remain at the beginning of the new year. At the same time, the European currency will remain in the range of 1.1000-1.1500. The reasons for this are the Fed's curtailment of stimulus and the ECB's "dovish" strategy in relation to monetary policy. On Friday morning, the EUR/USD pair was trading at the level of 1.1324, slightly losing its position. However, experts expect the euro's long-term downward trend to reverse by mid-2022.



ING's currency strategists are more confident in the growth of the US dollar more than the euro. The bank believes that the tightening of monetary policy by the Fed will cause the US dollar to rise. However, this sharp appreciation is constrained by the fact that the markets have put two to three rate hikes in their value. At the same time, analysts remind us that a fourfold rise is not excluded. Morgan Stanley currency strategists believe that in the second half of 2022, the US currency will partially plunge. However, most experts adhere to positive forecasts regarding the US currency.

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Who will take the lead between the US dollar and Chinese yuan?



The eternal rivals, the American and Chinese currencies, reasserted themselves at the beginning of the new year. Analysts said that they have rejoined the race to take control of the global financial market.

Experts believe that the yuan has quite high chances in relation to the US dollar. Many analysts view the Chinese currency as a successor of the American one, which can take the place of the global reserve means of payment. This gives confidence to the yuan and adds nervousness to the US dollar, although no one doubts the strength of the latter. It can be recalled that the US currency showed the best result in six years at the end of 2021, although it slightly lost its position at the close of the final trading day of the past year.

In the long term, experts admit that the US dollar's decline will be moderate, but not very loud. The value of the US dollar is declining against the background of the gradual recovery of the global economy after the curtailment of lockdowns caused by COVID-19. Other reasons for the potential decline will be increased political tensions between the United States and Europe, as well as the aggressive policy of the US towards China and Mexico. Experts also highlighted that the increased pressure from Washington on the above-mentioned trading partners with the use of anti-dumping measures and sanctions contributes to the devaluation of the USD.

Currently, the Chinese currency, which operates "quietly," will wait for its finest hour. By choosing the moment when the US dollar will weaken the most, the yuan will take advantage of the situation and press it out on the global financial market. Similar attempts were made last year, but they were unsuccessful. But at the end of 2021, the yuan was among the leaders among the currencies of emerging markets.

According to analysts, the US dollar's "protective function" in the world financial market over the past decade is gradually weakening. Its loss of the "safe haven" asset status will continue due to the transition of a number of countries to settlements in national currencies in international trade. The Fed's upcoming action to tighten monetary policy also adds pressure. Experts believe that this increases the risks of the devaluation of the US currency.

As for the Euro currency, this year can also bring disappointment amid the Fed's rate hike. The past year seemed extremely unfortunate for the euro, so the markets are worried that this might happen again as the ECB continues to adhere to soft monetary policy. According to the President of the regulator Christine Lagarde, tightening monetary policy is now unreasonable, since it interferes with economic recovery. The European regulator does not plan to raise interest rates this 2022.

The euro is currently inferior to the US dollar again, and the EUR/USD pair is capable of returning to the range of 1.0850-1.0900 and staying there for a long time. However, experts expect the pair to recover in the coming month, although they are not hoping for steady growth. On Monday morning, the EUR USD pair was trading at the level of 1.1338, attempting to keep its recovered positions.



There may be no winners or losers in the global financial market this year. The US currency has impressive potential to maintain its strength, but the Chinese one is strong due to its wait-and-see strategy. At the same time, experts summarize that both currencies claiming leadership are capable of peacefully coexisting in the global financial space.

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EUR/USD: US dollar's victory is not an indication of the euro's decline



The US dollar started the year on a positive note, pulling the European currency upward, which is on the verge of falling again. At the same time, it seems that the never-ending imbalance in the EUR/USD pair is not an annoying misunderstanding, but an important step towards its further development.

January 2022 started with sharp growth for the US currency amid expectations of an increase in the Fed's key rate and curtailment of stimulus. Market quotes have already incorporated the Fed's key measures – the first rate hike by May and two more at the end of 2022. Later, the US dollar was expected to decline moderately, which did not affect the overall optimistic picture. At the same time, the dollar index has shown impressive daily gains for the last two months. A sharp rise in the yields of long-term US Treasury bonds, which increased by 12.5 points, reaching a record of 1.642%, primarily supported the US dollar. This is the highest figure since the end of November 2021.

On another note, the Euro currency has to defend its positions again in order not to be an outsider. European markets started the week with a moderate rise, gaining about 1%. On Tuesday morning, the euro traded around the level of 1.1306, exceeding the weekly low of 1.1279. The EUR/USD pair was moving around the range of 1.1303-1.1304, striving for new highs, but later lost its positions along the way.



Analysts said that the EUR/USD pair temporarily found itself in a bear trap at the beginning of the week but managed to get out of it. However, there is still bearish pressure on Tuesday, leaving the pair vulnerable to market volatility. Based on preliminary calculations, the temporary resistance line in the EUR/USD pair is located near 1.1398 (55-day SMA), and the next resistance level is at 1.1430. Its breakdown will significantly weaken the bearish pressure. The implementation of such a scenario in the short term will help the pair to reach new peaks.

Barclays Bank analysts stated that the aggressive scenario of rate hikes in the US is strong support for the US currency. Currency strategists assess such a development as the most likely. An additional catalyst for such growth may be the minutes of the Fed's December meeting, which is expected to be published this week. According to experts, this will clarify the issue of raising rates by the Fed and the timing of stabilization of its balance sheet. On Friday, the Nonfarm Payrolls report will be released in the United States, demonstrating the change in the number of people employed in the non-agricultural sector of the country. Positive data will support the US dollar, which will pull up the euro again.

Many analysts are asking questions: is the current difficulties of the euro amid a winning US dollar a pattern? The situation is developing as it should, and so, will the periodic imbalances arising in the EUR/USD pair will not cause damage to the euro? The answer is yes at the moment. However, a moderately calm situation may completely change, and then the fragile balance in the EUR/USD pair will be disturbed.

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What kind of shocking surprise can gold present this year?



Gold's price increased yesterday, despite the growth of the US dollar and the yield on US government bonds. Some experts believe that it will bring such pleasant surprises more than once in 2022.

On Tuesday, prices for the precious metal closed higher despite the above-mentioned reasons. The dollar index rose by 0.1% against its major competitors. The indicator reached 96.286 points.

The growth of the US dollar was facilitated by the rapid dynamics of US debt securities. Yesterday, the yield on 2-year government bonds reached its highest in 22 months and amounted to 0.796%. The strengthening of expectations of the Fed's more aggressive policy acted as support.

On January 4, the CEO of the Federal Reserve Bank of Minneapolis, Neel Kashkari, said that the rate of growth in prices in the United States exceeded the forecast and that the acceleration of inflation was longer than economists expected. In this regard, the official believes that the Central Bank of America will raise interest rates this year twice, and not thrice.

The hawkish comments put some pressure on gold quotes. However, the yellow asset found strong support from economic data.

The Institute for Supply Management released a report on the level of business activity in the US manufacturing sector on Tuesday. According to statistics, the PMI in December fell to 58.7 from 61.1 recorded in the previous month. This is the lowest growth rate in almost a year. Economists had expected the indicator to be 60.

According to analysts, the slowdown in US business activity provoked a new strain of COVID-19. This is a very favorable factor for gold, which is traditionally perceived by investors as a safe haven asset. Meanwhile, Omicron infections continue to rise in America. Another record was reported at the beginning of the week: the figure was 1,083,948 new cases, Johns Hopkins University reported.

Coronavirus news remains a powerful trigger for this precious metal. Gold is growing as stricter restrictions are introduced in some countries due to the Omicron strain.

So, yesterday, February gold futures rose in price by 0.8%, or $ 14.50. At the close of the session, it traded at $ 1,814.60. Most experts believe that at this stage, the precious metal retains the potential to rise in the short term.



There is also an opinion that gold will rise in the future. Analysts Byron Wien and Joe Zidle are confident that the yellow asset will begin to regain its status soon as the main hedge instrument against inflation. They stated this in the article "10 surprises of 2022".

Interestingly, the publication appeared after gold showed the worst annual figure in 6 years, falling by 3.6% in 2021.

An unexpected forecast for 2022 suggests that investors will seek protection from problematic and more persistent inflation in the yellow asset. This will allow gold to rally to a new all-time high, even though the metal will continue to compete with cryptocurrencies.

B. Wien and J. Zidle expect gold prices to rise by 20% over the course of the year. If their scenario comes true, gold will trade at $ 2,160. Experts themselves estimate the probability of their prediction being fulfilled at more than 50%.

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Fed's hawkish comments resulted in gold's decline



Omicron continues to set records, rapidly spreading across the planet. Against this background, investors are looking for protection from gold. The value of the precious metal sharply increased on Wednesday.

Yesterday, the yellow asset continued its upward movement and rose for the second session in a row. Compared to its growth of 0.8% gold surged by 0.6% during the middle of the week. The increase in monetary terms was $ 10.50, and the final price was $ 1,825.10.



The rise in quotes was facilitated by the decline in key US stock indices and the weakening of the US dollar. So, during trading, the NASDAQ Composite indicator plummeted by more than 1%, and the US dollar fell by 0.4% against its main competitors.

The increase in cases with the new strain of COVID-19 exerted pressure on the indicators. On the other hand, analyst Lukman Otunuga notes that the alarming coronavirus statistics accelerated the flight of investors to a safe place – to the gold market.

Amid increased coronavirus risk, the precious metal showed impressive dynamics yesterday, but the celebration did not last long.

Following the close of trading, the minutes of the Fed's meeting on monetary policy issues in December was published. Hawkish comments by officials of the US central bank brought down gold prices to a 2-week low.

Fed officials noted that a strong economic recovery and high inflation in the US may require an earlier and faster-than-expected rate hike.

According to the updated data, the US regulator expects real GDP to increase by 4% over the next 12 months. The PCE inflation forecast was raised from 2.2% to 2.6% in 2022.

At the same time, the updated dot chart showed that amid record inflation, Fed officials intend to raise interest rates by three-quarters of a point this year.

According to analyst Brien Lundin, any hint that the first rate increase will happen earlier is actually not bearish, but bullish for gold.

The expert draws attention to the fact that the precious metal often rises when the Fed rates increase. Therefore, the initial rate hike in December 2015 ended a long bearish trend in the gold market. After that, the asset showed a confident positive trend for several months.

Now, investors are waiting for the Fed to comment on Omicron's impact on the economy. This could happen as early as next week, as Jerome Powell is due to address the US Senate Banking Committee in a meeting on his re-nomination as head of the central bank.

If the Fed chairman's excitement over a new strain of coronavirus turns out to be high, the price of the precious metal will soar. Otherwise, we are waiting for a further drop in quotes.

However, gold's movement in the short term may be affected by statistics from the US labor market. The US employment report will be published tomorrow. According to economists' forecasts, the number of new jobs in the US in December will amount to 422 thousand. This is almost 2 times more than in November. If the expectations are met, the yellow asset will most likely continue to decline.

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Gold has good prospects in the long-term



Gold suddenly went out of the way after starting 2022 positively. However, experts consider the current fall short-term, expecting the yellow metal to rise in the long term. The current.

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Forex Analysis & Reviews: Dollar still dominates other major currencies



Europe's single currency cannot outperform the US dollar. This was stated by Steen Jakobsen, chief investment officer at Saxo Bank. One of the main reasons is that the European regulator is the most static central bank in the world. Thus, the European Union's benchmark interest rate has remained at zero for quite some time, i.e. has not changed since March 2016. Furthermore, ECB head Christine Lagarde sees no reason to raise interest rates in 2022.

According to Eurostat, Euro area annual inflation rose to 4.9% in November, the highest in 25 years. Jakobsen believes that the EU economy can grow faster than the economies of other countries or show a current account surplus. The surplus is falling due to obvious difficulties in the services sector. This also applies to Germany, the eurozone's largest economy.

As for the US dollar, according to the SWIFT, it was still able to hold onto its position as the main currency in the international settlement ranking in November. Thus, the US dollar gained 39.16%. That means it rose by 1.53% in 12 months. It has strengthened due to the widening interest rate gap as well as inflation dynamics in the US compared to other major markets such as Japan and Europe.

The euro was clearly underperforming. It gained 37.66%, with a year-on-year increase of only 0.22%. Among the leaders were the British pound, Japanese yen, and Chinese renminbi.

A monetary tightening by the US Federal Reserve, which is expected by analysts in March, will give the dollar the strongest support, making it extremely difficult for most currencies to rise against the US dollar in the coming months.

It is the interest rate differential, not the coronavirus, that will determine sentiment in the major currency markets in the near future. The vast majority of analysts polled by Reuters are confident that fluctuations in the currency markets will become noticeably greater over the next three months. Notably, this confidence applies not only to the currencies of the major markets but also to emerging market currencies.

After an interest rate hike already in the first month of spring, the US regulator is expected to start reducing its assets. The dollar could then feel superior to the other major currencies. By the way, financial markets expect at least three rate hikes in the US this year.

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Is the EUR/USD pair preparing for a new battle?



Some analysts explain the short-term lull in the EUR/USD pair by grouping before a new surge. First of all, this concerns the US dollar, in the shadow of which the euro resides.

The US currency started the current year with a rise and is trying to consolidate in an upward trend. It already succeeds in this without huge efforts, contrary to the euro, which is still lying low. However, the US dollar remained inactive, weakly reacting to what was happening. On Tuesday morning, the EUR/USD pair was trading at the level of 1.1341. The pair is now dominated by a bullish mood, which can change anytime. The possible targets for the bulls are 1.1364, 1.1385, and 1.1442.

Currently, the US dollar is moving in the middle of the current range against major world currencies, as markets are waiting for the Fed's decisions on the timing and pace of normalization of monetary policy. The regulator keeps the markets in suspense, continuing the "hawkish" strategy launched at the end of December 2021. Experts are worried about the Fed's excessive enthusiasm, which is ready to use every fund to curb the powerful inflation.

Amid the Federal Reserve's high activity, the smoother actions of the ECB seem unnecessarily slow. Analysts fear that the European regulator will lose time to normalize the economic situation in the region. This development of events will seriously weaken the euro, which somewhat looks neglected right now. Experts consider Europe's sharp rise in gas prices to be an additional negative factor for the euro. The strengthening of this trend contributes to the further decline of the euro and the strengthening of its rival in the EUR/USD pair. After all, the US currency is given a head start in anticipation of a rate hike in March 2022 and an accelerated transition to cut stimulus.

The cycle of key rate hikes launched by the Fed in the middle of this year will clearly strengthen the US currency. According to experts, the main factors that support it are the tightening of monetary policy and the potential outflow of capital from emerging markets. It can be recalledd that the continued stimulus from the regulator and the negative US trade balance contribute to the weakening of the US dollar. Analysts said that the US dollar strengthening is impossible without tightening monetary policy.

The current instability in the world is pushing experts to negative forecasts. Many of them admit that currency battles will emerge in the near future. The implementation of such a scenario will lead to the devaluation of national currencies in relation to foreign ones. The "core" of such a war can be the US dollar, around which the entire financial world revolves. It is possible that this currency will take the victory again or share the throne with the euro. Moreover, excessive inflation could be the catalyst for the financial battle. According to analysts, the EUR/USD pair is highly likely to converge on the global markets.

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