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USD/CAD - Canadian Dollar Recoups Some Losses

USD/CAD Open: 1.2738-42, Overnight Range: 1.2723-1.2773, Previous Close: 1.2791

WTI Oil is at $70.99 and gold is at $1,783.30. US markets are higher today.

For today, USD resistance is at 1.2811. Support is at 1.2766.

- Risk sentiment turns mildly positive
- Fears from Omicron variant ease
- Commodity currency block rebounds

The Canadian dollar is clawing back losses following Friday’s coronavirus variant plunge. Omicron is the name of the latest COVID-19 variant that reportedly mutates quickly and is easily transmissible, which resulted in authorities around the world, closing borders.

The news sent traders scrambling for US dollar and bailing out of risk assets. The Dow Jones Industrial Average plunged 905 points while the S&P 500 lost 2.27% at the close on Friday. Both those indexes are posting gains in pre-market trading, although they have a lot of ground to cover to make up for Friday’s debacle.

European equity indexes are also trading higher, helped by a 5.0% rebound in oil prices, and soothing words from ECB officials.

USDCAD rallied hard Friday, but prices were unable to decisively break above the long-term downtrend line which came into play in the 1.2770-90 area, where they finished the session. USDCAD gapped lower in Asia, then consolidated in a 1.2723-58 in Europe.

Canadian dollar direction is determined by broad US dollar sentiment which means today’s domestic data (Raw Materials and Industrial Production data) will be ignored by traders.

Bank of Canada Governor is speaking via video at a New Zealand Conference today.

Asia equity markets closed deep in the red led by a 1.64% plunge in Japan’s Nikkei 225 index. Japan closed its borders to all international travelers. European bourses rallied, with the UK FTSE 100 rising 1.20%, even as European countries race to enact new travel restrictions. S&P 500 futures higher, but off its best level. WTI oil prices are 4.9% higher, while gold rose modestly. The US 10-year Treasury yield is 1.553%.

EURUSD traded in a 1.1261-1.1312 range. ECB President Christine Lagarde didn’t seem too phased by the latest COVID-19 news, suggesting the eurozone is better equipped to manage COVID-19 variants. Eurozone Economic Sentiment and Industrial Confidence data were ignored.

GBPUSD rallied on the back of improved risk sentiment rising from 1.3321-1.3362. However, the latest COVID-19 news on top of the France/UK immigration spat and a reduced risk that the BoE raises rates in December are limiting gains.

Today’s US data is second tier, leaving Wall Street price action to drive FX direction.

Today’s Suggested Range USD/CAD: 1.2700 – 1.2800