DAX, FTSE 100, CAC rebound after Omicron-linked sell-off

The Australian dollar tilted higher on Tuesday as investors reflected on the latest minutes by the Reserve Bank of Australia (RBA). The bank said that it will end its quantitative easing policy in May next year. The minutes showed that the members discussed two other options for its QE program. It could end the purchases entirely in its February meeting if economic numbers support that. Alternatively, the bank could taper in February and then review the purchases in May. Recent data showed that the country’s unemployment rate has retreated while inflation has risen. The biggest challenge for the Australian economy is the new Omicron variant. 

Global stocks, crude oil, and cryptocurrency prices bounced back after they declined sharply on Monday. In the United States, futures tied to the Dow Jones and Nasdaq 100 rose by 315 and 200 points, respectively, In Europe, the DAX and CAC 40 indices rose by more than 1%. At the same time, the 10-year and 30-year US bond yields rose. This performance could be because investors are buying the dip after the recent plunge. It was also because of the strong quarterly results by Micron and Nike. The two stocks rose by 8% and 4% in premarket trading. Also, there are signs that Democrats will reach a deal on the Build Back Better plan after Joe Manchin provided his conditions.

The British pound did relatively well after the latest public spending data from the UK. The data revealed that public borrowing fell to about 17.4 billion pounds. This was about 4.9 billion pounds less than during the same time in 2020. Still, the data was higher than the estimated 16 billion. Borrowing declined because central government agencies spent about 5.7 billion pounds that at the same time last year. The government received about 61.1 billion pounds. These numbers came at a time when the UK government is battling the Omicron variant.

GBP/USD

The GBPUSD pair rose to a high of 1.3258, which was higher than this week’s low of 1.3175. On the four-hour chart, the pair is above the key support level at 1.3170. It is also approaching the key resistance level at 1.3270, which was the highest level on December 10. It also moved to the 25-day moving average while the Relative Strength Index (RSI) has risen to 51. Therefore, the pair will likely keep rising as bulls target the key resistance at 1.3280.

EUR/USD

The EURUSD pair also tilted higher as concerns remained regarding the Omicron variant. The pair is trading at 1.1300, which is between the rectangle pattern that is shown in red. It is also oscillating along the 25-day and 50-day moving averages. The Relative Strength Index and the Stochastic Oscillator are in a neutral level. Therefore, the pair will likely remain in this range during the American session.

AUD/USD

The AUDUSD pair rose to a high of 0.7135 after the latest RBA minutes. This price was substantially higher than this week’s low of 0.7080. It also moved to the middle line of the Bollinger Bands while the MACD is still slightly below the neutral line. Therefore, the pair will likely keep rising as bulls target the upper side of the Bollinger Bands at 0.7200.