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Bannockburn Global Forex Drivers for the month ahead December 1, 2021 View Online Economic Calendar December 2: Eurozone Employment Data December 3: US Employment Data December 3: Canadian Employment Data December 6: Swiss Central Bank December 7: Bank of India December 8: National Bank of Poland December 8: Bank of Canada December 8: Central Bank of Brazil December 10: US CPI December 15: Federal Reserve December 16: Flash PMI December 16: Bank of England December 16: Norway’s Central Bank December 16: Bank of Mexico December 16: Central Bank of Turkey December 17: Central Bank of Russia Decem December 2021 FX Outlook The Omicron variant of Covid has been sequenced even as the older Delta mutation was spreading in the US and Europe. A high degree of uncertainty pervades the capital markets as the new month gets underway. Investors and business confidence has been shaken. There are many questions, and the answers may not be available for a few weeks. This makes our conclusions more tentative than usual. Nevertheless, a few things are clear. The Federal Reserve has pivoted to a greater concern about inflation, even though Chair Powell and Treasury Secretary Yellen anticipate price pressures moderating from the middle of next year. The strong upward momentum in crude oil prices was broken by a combination of several net consumer countries demonstrating the willingness to provide supply from strategic reserves and fears of demand destruction. This helped drive the US 10-year breakeven down 25 bp in the second half of November to return to 2.50%. Germany’s 10-year breakeven fell by the same about since peaking late October to slightly below 1.70%. Also, global equities will begin December in the middle of a correction, so if there is going to be a Santa Claus rally this year it will likely be from lower levels. Continue reading below... The yen’s rally at the end of November was sufficient for it to post its first gain in four months. It was the only major currency to appreciate against the dollar last month. Those currencies, like the dollar bloc, and Scandinavian currencies, which typically do well when risk appetites are strong, fell by 3-6.5% as the combination of a more aggressive Federal Reserve and the uncertainties are Omicron took a toll. Among emerging market currencies, the Chinese yuan stands out. It rose for the fourth consecutive month to bring the year-to-date gain to a little more than 2.5%, which makes it the strongest in the world. Click here for the full monthly outlook This email was sent by: Bannockburn Global Forex 255 East Fifth Street, Floor 8 Cincinnati, Ohio, 45202, United States