The Canadian dollar fell under a wave of risk-off sentiment washing over global markets.
The latest wave in Omicron cases led to another round of restrictions in many countries. The Netherlands essentially was closed, while Germany, Austria, Denmark, and Britain imposed or are considering a new array of business closures, travel restrictions, and capacity limits. Canada is not untouched. Also, Quebec reported a new daily record of cases on Friday, and Ontario said it had 4,177 new cases on Sunday. Politicians in both provinces have already announced new procedures to combat the spread of the virus.
Risk sentiment also tainted after news that more Chinese property developers could not pay debts, which may have triggered the Peoples Bank of China (PBoC) to cut the 1-year Loan Prime Rate to 3.8% from 3.85%., the first move since April 2020.
The covid-19 Omicron outbreak and fears of decelerating China economic growth helped drive WTI oil prices down 4.8% overnight. Hedge funds are reportedly continuing to cut positions, another factor weighing on prices, as are fears of a 2022 Q1 oil glut.
The US political drama also frightened markets. Democrat Senator Joe Manchin announced he would not support President Biden’s Build Back Better bill, saying it was too expensive, saying it will cost trillion’s more than expected. The announcement was enough for Goldman Sachs analysts to cut their US growth forecast in Q1 2022 to 2.0% from 3.0%.
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