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Uncertainty over Omicron variant to dominate markets. Investors were caught off-guard on Friday by the news that a potentially more contagious variant of the COVID-19 virus, with the propensity to re-infect, had been spreading quickly in southern African countries.
Factors that were previously driving market price action, such as economic data, normalization of monetary policy by major central banks, and inflation concerns, will now take a back seat to developments in the newly named Omicron variant.
It has since been detected in different parts of the world, and countries have already begun to tighten border restrictions. However, the World Health Organisation says it could take weeks to understand the level of severity of the variant. Federal Reserve Chair Jerome Powell and US Treasury Secretary Janet Yellen are due to speak this week, and the market will pay close attention to their take on the latest phase of the coronavirus pandemic.
US jobs lead to a busy calendar, but COVID is in focus. There is a packed global economic data calendar this week, led by US nonfarm payrolls. Usually, the US jobs report and other top-tier data would help shape market direction. Still, concerns over the Omicron variant and government reactions will probably push the numbers into the background.
November nonfarm payrolls on Friday are expected to show a healthy 550,000 increase in jobs, according to the latest Reuters poll, while unemployment is seen easing to 4.5% from 4.6% in October. The closely watched average hourly earnings component is expected to rise 0.4% month-on-month, the same as October.
Other key US data includes ISM manufacturing and non-manufacturing, consumer confidence, factory orders, ADP employment, Chicago PMI and Case-Shiller home prices.
Europe's calendar includes Eurozone sentiment indices, final November PMIs and consumer confidence, flash HICP inflation data, October retail sales and unemployment. German inflation and unemployment are also due.
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