The Grand Slam The information presented in this publication is purely for informational purposes and does not constitute investment advice, an offer to sell, or a solicitation to buy, and should in no way serve as a basis or be considered an incentive to engage in any investment. The macro point Last week, risk appetite was present in the forex market, benefiting commodity currencies, but not the euro. The European single currency is still penalized by fears of economic slowdown in Europe linked to the spread of the Omicron variant. However, initial studies on the variant are rather reassuring. Preliminary results in South Africa suggest that Pfizer's Covid vaccine provides partial protection against the new variant. This should also be the case for other vaccines in circulation. At this stage, only Austria has opted for a strict lockdown of its population (partially lifted from today). Other European countries are betting on strengthening restrictions. However, it is still too early to know the economic implications of these new pandemic control measures.Recent events also focused on China last week. The Chinese government decided on new measures to support the economy after several months of inaction. The last significant measure in this area was in June last year. At the time, the central bank lowered the mandatory reserve rate for banks, which allowed an influx of liquidity into the economic circuit and particularly supported small and medium-sized enterprises. The lifting of credit restrictions weighing on the real estate sector (these restrictions were introduced from last September following the difficulties of developer Evergrande, which destabilized the entire sector) and direct liquidity injections are among the main support measures. This should provide welcome support to activity in China as signs of slowdown have multiplied in recent months.Finally, let's conclude our global economic overview with Canada. The Bank of Canada was the only central bank of a developed country to meet last week. Unsurprisingly, it kept its monetary policy unchanged. The statement confirmed that a rate hike is now a matter of months. The forex market anticipates an increase in the policy rate of about 25 basis points, either at the end of the first quarter of 2022 or the beginning of the second quarter of 2022. The Omicron variant was mentioned by the central bank. But it doesn't seem to worry it. Economic forecasts were also updated. The central bank expects Canada's growth to reach 4% in 2022 before tapering slightly in 2023 to 3.75%. The factors supporting activity identified are domestic consumption, business investment, and the continuous rise in commodity prices. The resource sector contributes 10% to Canada's GDP. Expectations of rate increases combined with the continuous progress of commodities (notably oil) should favor an appreciation of the Canadian dollar in the medium term, especially against the euro. Since the beginning of the year, the CAD has already appreciated by nearly 8% against the European single currency.At the start of the week, the EUR/USD is closely monitored by traders who are eagerly awaiting the meeting of the American Federal Reserve. Observations this Monday show an increase in long (buying) positions on the US dollar. There might be a partial unwinding of these positions on Wednesday night, which will induce high volatility on currencies. It is advisable to adopt the right hedging strategy. From our point of view, the trend remains bearish on the EUR/USD in the medium term. The next target is at 1.1162.The supports and resistances displayed below indicate the respective low and high points within which prices should evolve during the week.SUPPORTSWEEKLYRESISTANCESWEEKLYS2S1R1R2EUR/USD1.10401.11621.14571.1502EUR/GBP0.83010.84080.86220.8729EUR/CHF1.02451.03241.05651.0601EUR/CAD1.40341.42541.46131.4694EUR/JPY125.12127.07129.33130.74Several central banks are set to meet for the last time this year: the American Federal Reserve, as we have indicated, but also the European Central Bank and the Bank of England.Despite rampant inflation in the eurozone (4.9% in November), the European Central Bank is not expected to change its monetary policy in the short term. It should only adjust its latest projections concerning inflation for the years 2021 and 2022 upwards.The debate is different in the United States. The Federal Reserve has opened the door to an acceleration of tapering to combat rising prices. The topic will be on the table for discussions among FOMC members – the body responsible for deciding on rate direction. A decision could be made as early as this week and take effect at the beginning of next year.The real uncertainty concerns the Bank of England. A few weeks ago, traders were unanimous about the likelihood of a rate hike in December. Since then, the health situation has changed with the emergence of the Omicron variant. Restriction measures have been implemented in the UK and may be tightened in the short term. This could negatively impact economic activity. Consequently, a rate hike this Thursday is far from certain. All scenarios are possible. The best advice we can give is to consider protection against volatility, which is sure to spike no matter what monetary policy decision is made.Below you will find the publications and events that should have a major impact on exchange rates.DAYTIMECOUNTRYINDICATOREXPECTATIONS?12/1414:30Producer Price Index (November)Consensus among analysts is expecting a 0.6% increase month-on-month.12/1520:00Central bank meeting and economic projections updateInflation forecasts will be closely watched. Tapering could accelerate from January 2022.20:30Press conference by J. PowellHe might give valuable clues about the evolution of monetary policy in 2022.12/1613:00Central bank meetingAnything is possible. Some analysts anticipate a 15 basis point rate hike. Others anticipate a status quo. It’s a high-risk event for the forex market.13:45Central bank meetingNo change in monetary policy for now.