Canadian dollar slides as US yields jump

Volatility continues for Canadian dollar 

After ending 2o21 with strong gains, the Canadian dollar didn’t miss a beat and continued to show volatility on the first day of the New Year, this time posting sharp losses. In the North American session, USD/CAD is trading at 12761, up 0.95% on the day.

The US dollar is showing broad strength on Monday, courtesy of a surge in US Treasury yields. The 10-year notes rose 0.07% to 1.57%, while 30-year notes climbed 0.06% to 1.95%. Last week, the markets didn’t react to the massive upswing in Omicron cases, relying on reports that Omicron caused milder symptoms than other Covid variants. With risk appetite intact, USD/CAD fell by 1.3%. However, with the US breaking records of the number of cases, the mood of the market has shifted, with growing concerns about the ability of health services to cope with the spike in infections. Nervous investors have flocked back to the safe-haven US dollar and sent the Canadian dollar sharply lower. The Canadian dollar is sensitive to risk appetite, so the currency could continue to show sharp movement this week as the markets focus on Omicron headlines.

Looking at the week ahead, the US releases ISM Manufacturing PMI and JOLTS Jobs Openings on Tuesday, followed by the FOMC minutes on Wednesday. On Friday, both Canada and the US will release key employment reports, highlighted by US nonfarm payrolls for December. This will be the final NFP report before the Omicron wave, and the consensus is for a gain of 400 thousand new jobs, up from 210 thousand in November.

.

USD/CAD Technical

• • USD/CAD has support at 1.2756. Below, there is support at 1.2615
  • There is resistance at 1.2987. Above, there is resistance at 1.3077

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.