Volatility could continue for the loonie

This is a reliable indicator of risk sentiment, and the high volatility we see in the currency reflects the uncertainty of the times. In particular, Omicron, the latest variant of COVID, has unleashed across the world as countries scramble to close their borders and take other health measures in hopes of curbing Omicron’s impact.

The good news is that most reports have shown Omicron to be much milder than Delta, which hopefully means this latest wave of COVID won’t cause as much devastation as Delta. However, there is no doubt that Omicron is much more contagious than Delta and poses a serious health hazard to unvaccinated people, potentially overwhelming hospitals.

The uncertainty surrounding Omicron has resulted in significant volatility in the financial markets, with each security being a potential market driver. Risk-sensitive currencies such as the Canadian dollar and the dollar all suffered large losses in November when Omicron fears peaked and risk sentiment collapsed.

We saw risk appetite improve in December, thanks to Omicron’s reports being less severe. This allowed risk-sensitive currencies to hold their own in December. With a very light economic calendar this week and thin liquidity, any news about Omicron could send the Canadian dollar for a spin.

Canadian markets are closed today and Tuesday, and there are no Canadian posts this week. This week’s lack of liquidity means Omicron headlines could cause abrupt intraday moves, or markets could have a Christmas week without incident as investors focus on crackling chimneys and eggnog instead. than on the last Omicron headline.

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
USD / CAD daily chart.

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