Loonie Maintains Range Ahead of US Jobs Report; Omicron Loom Fears


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“Finally, signs of a major bottom in the works after a steep drop from 2020 high. A recent weekly close above 1.2500 encourages constructive outlook and opens the door for a return to the next one critical resistance in the area of ​​1.3000. Any setbacks should be well taken care of within 1.2200.

Today, the USD / CAD pair traded in a range of 1.2774-1.2829. The Canadian dollar hit its lowest level in more than two months on Friday. After gaining about 2.3% in October, the loonie weakened more than 3.1% last month.

The Dollar Index, which measures the dollar’s value against six foreign currencies, was trading down 0.17% at 95.871. The Invesco DB US Dollar Index Bullish Fund, designed for investors looking for a cost-effective and convenient way to track the value of the US dollar against a basket of the six major world currencies – Euro, Japanese Yen, British Pound , the Canadian dollar, Swedish krona and Swiss franc – ended up 0.25% to 25.77 on Wednesday.

Last week, the minutes of the US Federal Reserve meeting confirmed market expectations that the Fed will hike rates sooner than other major central banks. The greenback hit 16-month highs against most other major currencies due to the highest U.S. inflation in a generation that has prompted investors to bet that interest rates should rise sooner than they are. never thought so before.

Non-farm payrolls probably increased by 550,000 jobs in November compared to 531,000 jobs seen in October, according to Reuters. A closely watched employment report for November will be released by the Labor Ministry on Friday.

It is very likely that the world’s dominant reserve currency, the USD, will rise by the end of the year, largely due to the expectation of at least one rate hike next year. . With the dollar strengthening and the possibility that the Federal Reserve will raise interest rates earlier than expected, the USD / CAD pair could see a rise.

Canada is the world’s fourth-largest exporter of oil, which edged up as the market awaits OPEC + ‘s decision. Oil prices hit a three-month low on Tuesday after the Moderna chief questioned the effectiveness of COVID-19 vaccines against Omicron, which rocked markets and raised concerns about the demand for oil, Reuters reported.

At the time of writing, U.S. West Texas Intermediate (WTI) crude is trading 0.40% higher at $ 65.8 per barrel. Rising oil prices lead to higher US dollar revenues for Canadian exporters, which in turn increases the value of the loonie.

“The 3 commodity units (AUD, NZD and CAD) now appear vulnerable on 2 fronts – (1) as risky currencies trading in a risk-free environment created by the new Covid strain; and (2) the 3 units with one of the most aggressive central bank rate hike profiles expected by the markets. Against the USD however, the 3 units could find better support (as the USD is likely even more vulnerable to the removal of the more aggressive rate pricing by the Fed), ”Citi analysts noted.

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