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The Canadian dollar is struggling to navigate the latest omicron wave with mixed performance against the rising commodity prices.
Oil Prices have left the pair in the middle of the range over the past six weeks with the bottom at 1.2600 and top at 1.2950.
With all the lockdowns in Canada at the moment, Q1 is looking very soft and likely negative. The Bank of Canada is going to have to enter the battle with this status quo during the coming months and it could keep them sidelined.
What’s especially difficult for the BoC is that strong housing data yesterday signal a bubble that continues to inflate. For the BoC, policymakers might hike sooner in order to stem the rising tide in home prices, even if the economy is slow.
The case for commodities is strengthening as oil prices rise back above $80. Today’s trade data showed the best Canadian exports since 2006.
Market sentiment has been good for weeks but the Canadian dollar has not responded. If wider signs of a global growth disappointment do appear, the Canadian dollar is vulnerable and will potentially be impacted. At the end of the current trading session, CAD is more dependent on global growth than anything in the domestic economic environment.
