CAD Steadies Low Due To Omicron Risks

The Canadian dollar strengthened slightly against its US counterpart on Thursday but held near its lowest level in over two months, as investors assessed the global economic impact of the Omicron coronavirus variant and looked ahead to domestic data.

The Canadian dollar was trading 0.1% higher at 1.2807 to the USD, or 78.08 U.S. cents, after touching intraday 1.2837, which was the 10-week low it hit on Tuesday.

The market experiences ongoing uncertainty from the Omicron concerns plus uncertainty related to U.S. politics heating up as while getting closer to deadlines on several topics including debt ceiling.

Uncertainty tends to benefit USD-CAD, but at the same time resistance (at 1.2850) seems reasonably solid for now, for example, the US federal government is approaching its USD 28.9 trillion borrowing limit and failure to extend or lift the limit in time could trigger an economically catastrophic default.

The price of oil, one of Canada’s major exports, fell as investors awaited an OPEC+ decision on supply policy amid fears that the variant could hit fuel demand.

U.S. crude prices were down 2% at $64.23 a barrel, while the Canadian dollar was nearly unchanged at 1.2821 to the greenback, or 78.00 U.S. cents. The currency traded in a range of 1.2778 to 1.2834, after touching on Tuesday a 10-week low at 1.2837.