Will Omicron help the US out? Review as of 03.12.2021

The Fed isn’t afraid of a new Covid-19 variant. Does it have any reasons for that?

Most brains are suitable only for brainwashing

It was supposed to happen one day. The emergence of the South-African Omicron variant has agitated the financial markets so much that its British and Indian predecessors feel jealous. What doesn’t kill you mutates and makes another attempt. Omicron is a remake of the 2020 pandemic movie. No one knows what will happen next. Everything is beginning from scratch, and both humanity and financial markets will hardly like it.

While epidemiologists are trying to find out more about the new variant, the Fed is using good old techniques. Jerome Powell wasn’t afraid of Delta, so why should he be afraid of Omicron? Who’s finally the boss in the market, the Fed or Covid-19?

– Who’s the boss in your family?

– I’m not sure. But my wife always says I’m in charge while she’s away.

When it comes to identifying the main current factor in currency rate fluctuations in Forex, 41% of Reuters experts prefer monetary policy over Omicron, and 33% of respondents bet on the new variant. The difference isn’t big, and only time can show who was right. At the same time, the lack of fear of the coronavirus results from the Fed’s previous efficient policies. Its enormous stimuli helped the US economy recover after the recession. So, why not apply them again if something goes wrong? The central bank’s love for QE reminds me of some women’s mindset:

– Leave me alone, darling, come back, you, idiot!

Resigning soon, Fed’s Vice-Chair Randal Quarles decided to slam the door one last time. He stated that the central bank had created a dangerous precedent, attempting to save the economy from recession. It started to lend money to businesses and municipalities. So, the government might want soon to use the Fed’s funds to improve road surfaces or colonize Mars.

Let’s not talk about independence. Donald Trump once criticized Jerome Powell fiercely and eventually forced him to drop rates. Now the Fed’s obeying Joe Biden, who puts the fight against inflation front and center.

Interestingly, the emergency of Omicron was in the interests of the current US president. Global demand concerns dropped oil quotes much faster than OPEC+ increased production could have done. Powell talks about oil supply-chain issues and is ready to take action amid soaring inflation. He has even given up the idea that the current high prices are temporary. It appears that the new variant should have emerged in the US and not in South Africa because the US needs it more. The mass media joined fast the brainwashing campaign, too.

So, it’s easy to answer the question, “Why is the US dollar particularly sensitive to Omicron?” America needs low inflation and a stable dollar. The virus can help it out.



Price chart of EURUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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