The US dollar weakness due to the employment report may not be viable. The employment data is questionable due to Omicron and Canada’s gains may be fully unbound when the January data is available.
The Canadian dollar started the trading week as the best performing G-10 major currency compared to Friday’s opening level. The gains pulled back in early US trading session, as sharply falling US equity futures soured risk sentiment.
The Loonie plunged from 1.2723 to 1.2631 Friday after the better-than-expected Canadian employment data and a depressing US NFP report. The losses resumed overnight and hit 1.2613 just before NY opened.
The Canadian dollar continues to be boosted by rising oil prices. WTI is consolidating post-NFP gains in a $78.50-$80.50 band. Traders appear to be discounting an Omicron-induced oil demand slowdown, with prices underpinned by supply disruptions in Libya and Kazakhstan.
The US and NATO are meeting with Russian officials to disperse tensions around Putin’s plans for the Ukraine, and Ukrainian officials are not invited. Traders are happily ignoring the risk that Russia annexes the Ukraine. We expect the Loonie to continue ranging.
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