- Market sentiment has improved moderately as it appears that symptoms of the omicron variant are trending mild. According to South African health authorities.
- The US dollar index gains some traction as investors weigh the impact of the new variant.
- USD/CAD in the short term has a bullish bias, would find resistance around 1.2800.
USD/CAD fell in the Asian session on Monday as COVID-19 fears about the omicron variant waned after South African health officials said symptoms are mild to moderate. However, it appears to be more transmissible. During the U.S. session, USD/CAD recovers from some early session losses, rising to 1.2757 at the time of writing.
Global equity indices rise as concerns about the omicron variant of COVID-19 subside.
Market sentiment is positive, with European stock indexes recouping some of last week’s Friday losses. Despite tight liquidity conditions that exacerbated volatility across financial assets.
The dollar index, which had dipped below 96.00, is now up 0.28 percent at 96.36. Furthermore, as market sentiment improves, the yield on the 10-year US Treasury bond rose seven basis points to 1.557 percent. Though investors remain cautious as they await more information on the omicron variant.
Meanwhile, the U.S. crude oil benchmark Western Texas Intermediate (WTI), which has a strong correlation with the Canadian dollar, is trading at $72. Retracing nearly half of Friday’s drop sparked by COVID-19 fears.
The USD/CAD pair fell to 1.2715 in the overnight session. However the pair is still under pressure as investors focus on the severity of the disease that could be caused by the omicron COVID-19 variant.
However, market participants’ attention would be drawn to risk appetite. Macroeconomic data and central bank statements may affect the USD/CAD.
On Monday, the Canadian economic agenda released the third-quarter Current Account. Which increased by 1.37 billion, less than the 1.9 billion expected.
In terms of central bank speeches, Bank of Canada Governor Stephen Macklem will speak around 19:00 GMT, while Federal Reserve Chairman Jerome Powell will speak at 20:05 GMT.
USD/CAD price forecast.
The pair is consolidating above the hourly simple moving averages (HSMA) in the 1.2715-60 range, indicating a bullish bias in USD/CAD. Breaking the 1.2760 range high will reveal the November 26 high at 1.2798, 2 pips below the 1.2800 figure. The R1 daily pivot point at 1.2842, followed by the R2 daily pivot point at 1.2896, would be exposed if the latter was broken.
While the pivot point at 1.2743 is a first support level, the 50 and 100 SMAs at 1.2726 and 1.2701 are the second and third respectively.