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Oil

• Oil has had another strong start to the new year. 
• Oil is up more than 1% on the day, extending the rise that began at the beginning of the year. 
• Overall, it has been an amazing week for oil. There were some intraday drops amid some hits to risk sentiment, but they were immediately picked up, and we are again back where we started. That, I believe, says volumes about the underlying sentiment. As of now, oil appears to be on track for a third consecutive weekly rise, with the gain this week approaching 7%. For the time being, the $80 level continues to provide daily resistance as the market closes today.
• However, if buyers can maintain a break above that, there’s a significant probability that oil will hold the course and push its way back up to $85 next. Even if OPEC+ intends to increase output in February as scheduled, continued supply/demand limitations are working in favour of oil. However, while this week’s increase is positive, there are still issues to be aware of. 
• Omicron is, of course, the most serious issue, and how it affects significant oil importers, particularly China, is something to be concerned about. Aside from that, a broad examination of risk attitude may be worthwhile.
• Stocks are looking a bit fragile, which might cause oil’s euphoria to dissipate if a risk rout begins.

 

Germany 

• Germany will detail additional limits to combat the omicron version today 
• German regional leaders will meet today to agree on new steps to combat the omicron form. 
• Among the procedures under consideration is requiring persons with only two immunisation shots to provide confirmation of a negative test in order to enter a restaurant or a bar, whereas only those with a booster injection are exempt. 
• However, quarantine regulations are likely to be loosened in order to prevent having too many individuals in isolation at the same time.
• For reference, RKI states in its most recent weekly report that the omicron variety accounts for around 44 percent of COVID-19 infections in Germany, and that approximately 41 percent of patients have gotten their booster dose.

Currency 

• Major currencies are continuing in a pre-NFP calm; there isn’t much going on in European morning trading; equities are likewise looking cautious, while Treasury rates are barely moved. This is shaping up to be a regular wait-and-see session in anticipation of the US employment data later in the day. Returning to forex, the EUR/USD is currently stuck around 1.1300, with huge expiries remaining close to the figure level today. Meanwhile, the USD/JPY is still flirting with a breach of 116.00 as buyers wait for confirmation from the major risk event tomorrow. GBP/USD is trading at 1.3552, barely below its 100-day moving average, but above its key hourly moving averages of 1.3497-20.
•  In terms of commodity currencies, the AUD/USD is held down around 0.7150-60 as sellers maintain near-term grip in the pursuit of 0.7100. Today’s large expiries at 0.7160 and 0.7200 are worth noting.

Switzerland

• Switzerland’s December foreign currency reserves were CHF 944.5 billion, down from CHF 1,006.4 billion the previous month. 
• Prior figure of CHF 1,006.4 billion was amended to CHF 921.7 billion. 
• The source’s release was somewhat delayed. Swiss foreign reserves fell somewhat at the end of last year (post-revision), but remain high as the underlying trend continues to rise. That is unlikely to change this year.