USD/CAD steady around 1.2760s, as COVID-19 omicron variant worries ease
- The market sentiment has moderately improved, as it seems the omicron variant symptoms tend to be mild, per South African health authorities.
- The US Dollar Index gains some traction as investors weigh the impact of the new variant.
- USD/CAD in the near term has an upward bias, would find resistance around 1.2800.
On Monday, in the Asian session, the USD/CAD edged lower as COVID-19 worries about the omicron variant scale back a touch after South African health authorities reported that symptoms tend to be mild to moderate, but it appears to be more transmissible. During the New York session, the USD/CAD recovers some earlier day losses, climbing up to 1.2757 at the time of writing.
Global equity indices rise as concerns about the COVID-19 omicron variant ease
The market sentiment is upbeat, as European equity indices trim some of last week’s Friday losses amid thin liquidity conditions, which exacerbated fluctuation across all the financial assets. The US Dollar Index, which retracted all the way nearby 96.00, advances 0.28%, sitting at 96.36. Also, the US 10-year Treasury yield spike seven basis points, up to 1.557%, as market sentiment improves, though the investors are still cautious awaiting more information regarding the omicron variant.
In the meantime, the US crude oil benchmark, Western Texas Intermediate (WTI), which has a strong correlation with the Canadian dollar, is trading at $72.00, nearly 50% of Friday’s decline, caused by COVID-19 worries.
The USD/CAD price action in the overnight session witnessed a dip towards the 1.2715 area, but the pair remains subdued as investors weigh on the severity of the illness that the COVID-19 omicron variant could cause.
That said, market participants focus would lean towards risk appetite. However, macroeconomic data and central bank speakers could move the needle on the USD/CAD pair.
On Monday, the Canadian docket featured the Current Account for the Q3, which increased by 1.37B, lower than the 1.9B expected. On the US front, Pending Home Sales for October on a monthly basis is expected to rise by 1%, which would be revealed at 15:00 GMT.
Turning to central bank speaking, the Bank of Canada Governor Macklem would cross the wires around 19:00 GMT, whereas Fed Chairman Jerome Powell would do it at 20:05 GMT.
USD/CAD Price Forecast: Technical outlook
In the 1-hour chart, the pair is consolidating around the 1.2715-60 range, above the hourly simple moving averages (HSMA’s), indicating the USD/CAD has an upward bias. A break above the 1.2760 range top would expose the November 26 high at 1.2798, 2 pips short of the 1.2800 figure. A breach of the latter would expose the R1 daily pivot point at 1.2842, followed by the R2 daily pivot at 1.2896.
On the other hand, the daily pivot point at 1.2743 is the first support, followed by the 50 and the 100-HSMA’s at 1.2726 and 1.2701, respectively.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
