USD/CAD clings to the 1.2800 figure amid mixed-risk sentiment

The US/CAD extends its gains for the third day in a row, amidst a mixed bag market sentiment, modestly rising 0.02%, trading at 1.2817 at the time of writing. European indices are falling, following the Asian equity futures path, whereas, In the US, major stock indices are rising as traders keep assessing the impact of the COVID-19 Omicron variant in the global economy.

The USD/CAD remained range-bound in the overnight session, trading between the 1.2775-1.2829 range, fluctuating between the daily central pivot point and the December 1 swing high. That, in part, as risk-off market sentiment, dented investors’ appetite for riskier assets; also, crude oil prices remained subdued ahead of the OPEC+ meeting. As Wall Street opened, USD/CAD bulls pushed the pair to a new daily high at 1.2835, but the move was faded, retreating towards the 1.2810s area.

Fed officials add to the hawkish list

On Wednesday, Fed policymakers reinforced the need for a faster taper. Fed’s Chair Jerome Powell said that inflation is linked to the pandemic, and elevated prices have been stubbornly persistent. Further noted that “we need to move on from the word transitory” and reinforced the strength of the US economy.  

In the same posture, Cleveland Fed President Loretta Mester said, “making the taper faster is definitely buying insurance and optionality so that if inflation doesn’t move back down significantly next year, we’re in a position to be able to hike if we have to.” She noted that recent data “have come in supportive of that case, so I’m very open to considering a faster pace of tapering.”

That said and for those who like to keep the score, Bullard, Bostic, Mester, and Powell favor a faster QE’s reduction, which would aim to end in the first quarter of 2022.

Meanwhile, Western Texas Intermediate (WTI) US crude oil benchmark falls almost 1%, trading at $64.99, underpinning the USD/CAD direction, amid some US Dollar weakness.

In the macroeconomic docket, there’s nothing from Canada to report. On the US front, Initial Jobless Claims for the week ending on November 26 rose to 222K, better than the 240K forecasted, while the Continuing Jobless Claims for the week ending on November 18 rose to 1.956M, lower than 2M for the first time, since March 2020.

During the day, Fedspeaking would be the driver of the day, with Bostic, Quarles, Daly, and Barkin  crossing the wires.