The case for investing in emerging market currencies into the new year is darkening, despite expectations for a surge in interest rate hikes in the coming months, Bloomberg reports. MSCI’s emerging currency index remains 1.6% below its June peak and traders are pessimistic about a recovery even as central banks in at least 13 emerging economies prepare to hold their policy meetings this week. Adding to the pressure is the US Federal Reserve’s upcoming decision on speeding up its stimulus withdrawal, along with global inflationary pressures and Omicron threats.

Omicron or not, currency volatility will likely carry over into next year: Volatility traders are expecting persistent volatility in foreign exchange markets even after concerns over Omicron subside, and last well into next year, Bloomberg reports.

Omicron will likely slow global demand for oil: The International Energy Agency (IEA) has trimmed its 2022 demand forecast by 100k barrels a day for the rest of the year and 2022 due to travel disruptions caused by the spread of the Omicron covid-19 variant, it said in its latest oil market report.

Demand is still expected to return to pre-pandemic levels: The energy watchdog still expects global demand to rise by 3.3 mn bbl/d to 99.5 mn bbl/d, writing that the variant should “temporarily slow, but not upend, the recovery in oil demand.”

But production is expected to outpace demand into 2022, according to the IEA, which forecasts 6.4 mn bbl/d of new supply next year compared to just 1.5 mn bbl/d in 2021. OPEC+ had predicted earlier on Monday that the new covid variant would have only a mild impact on oil markets.

THE CLOSING BELL-

The EGX30 fell 0.7% yesterday on turnover of EGP 1.24 bn (10.6% below the 90-day average). Regional investors were net buyers. The index is up 7.1% YTD.

In the green: Heliopolis Housing and Development (+5.6%), Ezz Steel (+4.3%) and Orascom Development Egypt (+1.7%).

In the red: Egyptian Resorts Company (-9.5%), Speed Medical (-5.0%) and Fawry (-3.8%).

Major Asian benchmarks are uniformly (if gently) in the red this morning, and futures suggest shares in Western Europe, the US and Canada will all open weakly in the green at the opening bell later today. The sole outlier: Paris’ CAC 40.