Canadian dollar buoyed by risk sentiment

The Omicron variant continues to rage through Europe and the US, but the markets are in a positive mood. Why? There is a feeling that Omicron is much milder than Delta, which means that a wave of Omicron may get a lot of people sick, but it will not kill thousands and overload hospitals with severely ill patients. Time will tell if this is an accurate diagnosis. In the meantime, the global recovery outlook has improved and commodity prices are higher, which is good news for the Canadian dollar.

Risk sentiment has been moving up and down over the past few weeks, depending on the headlines de jour concerning Omicron. Investors have been encouraged by the latest medical reports out of the UK and elsewhere which indicate that Omicron is up to 70% less severe than Delta. The equity markets continue to rise and risk barometers such as the Canadian dollar have moved higher this week.

Markets optimistic about Omicron

The markets are starting to view Omicron like a storm in a tea cup, but there is good reason not to sigh in relief just yet. First, Omicron is five times more contagious than Delta, which means that unvaccinated people could experience severe symptoms. Second, some reports indicate that Omicron is not necessarily less severe than Delta. Third, the Chinese Sinovac vaccine, which is the only one available for a majority of the world (the developing countries), doesn’t appear to be effective against Omicron. In the meantime, the markets have dismissed Omicron as an annoying nuisance, and this rosy outlook could continue into January, barring some grim statistics from a wave of Omicron.

Canada’s GDP for October rebounded with a gain of 0.8% y/y, up nicely from 0.1% beforehand. The economy has now expanded for five straight months and the BoC is projecting growth in Q4 at 4.0% y/y, as the economy continues to gather steam, despite the challenges of Covid.


USD/CAD Technical

    • USD/CAD has support at 1.2756. Below, there is support at 1.2615
    • There is resistance at 1.2987. Above, there is resistance at 1.3077

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.