CAD sinks to 2-month low, GDP next

The Canadian dollar is unchanged on Monday, following sharp losses in the Friday session. In North American trade, USD/CAD is trading at 1.2789, up 0.01% on the day.

Omicron sends the Canadian dollar tumbling

There was a flurry of activity on Friday in the markets as headlines blared about the spread of the Omicron variant of Covid-19. There was panic in the markets, as oil, equities, and minor currencies headed south. The Canadian dollar took it on the chin, falling 1.12%, its sharpest decline since July.

The markets have calmed down on Monday, but fears remain that the variant could cause a massive spike in Covid cases. How much of a threat is Omicron? That would depend on who you ask. There have been reports out of South Africa, where Omicron was first detected, that the symptoms have been mild. The World Health Organisation sounds less optimistic, saying that Omicron poses a ‘very high’ global risk and is expected to spread. Health officials are scrambling to determine how much of a threat the new variant poses, but this will take time until more information is available. The markets loathe uncertainty, so we can expect heightened volatility in the markets in the coming weeks.

The Omicron variant has grabbed the headlines for only a few days, but already a Fed President has weighed in. On Friday, Atlanta Federal Reserve President Raphael Bostic said he remained open to accelerating the pace of the Fed’s bond taper as well as one or two rate hikes in 2022. Bostic noted that previous variants had caused less economic damage than the delta variant and played down concerns that the US economy would suffer a downturn due to another wave of Covid.

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 USD/CAD Technical

• There is support at 1.2681. Below, there is support at 1.2569
• We find resistance at 1.2740 and 1.2852

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