Ever since Boris Johnson announced the first omicron death in the UK (with no details), the market's mood has deteriorated.
AUD/USD held up okay at first but aggressive selling kicked off in US trading and the pair is now down 59 pips to 0.7112 to the lowest since last Tuesday.
The chart makes the three-day bounce last week look like a dead-cat, unfortunately.
I think omicron is hitting home for many countries and people at the moment. For instance, we have 1500 cases in Ontario, where I am. They're now forecasting a effective reproductive number of 3.32, which is a doubling every three days. For reference, all prior variants have a combined RT of 1.27 That would put cases at 20,000 by Christmas, which would be highest of any time during the pandemic.
Even if all those cases are mild, that's going to be a real hit to economic activity and schools will be shut down beyond the Christmas holidays. It also looks like this hit is going to be globally coordinated and I can't help but believe that China won't be able to contain it.
The market has shown a remarkable ability to look through covid but with stocks near records, there isn't exactly a dip worth buying at the moment and real money might be playing it safe to lock in a sensational year.
Hopefully this is the last wave though and that's the real hope.
