Forex Today: Powell Signals Earlier Tapering Possible

Adam Lemon

Jerome Powell sparks volatile swings as he suggests that tapering may need to end sooner than planned.

  • Chairman of the Federal Reserve Jerome Powell stated yesterday that if the impact of the omicron variant turns out to be small, it may be appropriate to speed up tapering asset purchases, paving the way for an earlier rate hike. Markets swung on the news but prices have mostly recovered their ground during the Asian session, with risk sentiment improving.
  • In the Forex market, short-term momentum is most strongly against the Japanese yen and most strongly in favor of the commodity currencies (AUD, CAD, and NZD).

  • The omicron coronavirus variant is still being researched and monitored, with morbidity remaining unclear. However, markets were spooked yesterday by the statement by Moderna’s CEO that it was very likely existing vaccines would be less effective against it. Although risk sentiment improved during the Asian session, markets remain prone to very strong risk-off movement if forthcoming news about the potency of the omicron variant is negative.
  • The omicron variant is confirmed to be present in South Africa, the UK, Israel, the Netherlands, Canada, Australia, Belgium, Botswana, the Czech Republic, Denmark, Germany, Italy, Portugal, Spain, and Austria. There are confirmations of community spread. Several countries (most recently Japan) have either entirely closed their borders to non-citizens, while the US and the EU and other countries are imposing a ban on travel from South Africa and other African nations. The South African government is complaining such bans will be useless and damaging and have urged their repeal. The omicron variant has originated in South Africa and is now widespread there.
  • Yesterday’s Canadian GDP data release showed monthly growth of 0.1%, slightly higher than the zero which had been expected.
  • Yesterday’s Australian GDP data release showed a quarterly decline of 1.9%, considerably better than the 2.7% decline which had been expected.
  • Last week saw the fifth consecutive global weekly rise in new confirmed coronavirus cases after two months in which cases fell steadily.
  • It is estimated that 54.4% of the world’s population has received at least one dose of a coronavirus vaccination.
  • Total confirmed new coronavirus cases worldwide stand at over 263.1 million with an average case fatality rate of 1.99%. Cases are already surging in South Africa and Europe and many analysts expect cases will rise significantly if wherever the omicron variant becomes established.
  • The rate of new coronavirus infections appears to now be increasing most quickly in Belgium, Bolivia, Canada, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Jordan, South Korea, Laos, Lebanon, Luxembourg, Mali, Monaco, Malta, Netherlands, Norway, Portugal, Poland, San Marino, Slovakia, South Africa, Spain, Switzerland, Trinidad, the UK, and Vietnam.
Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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