USD/CAD rallies above 1.2750, up over 1.0% on first trading day of 2022 as US yields surge


  • USD/CAD has surged back to the north of the 1.2750 mark, its biggest one-day gain since November.
  • The dollar is strengthening amid a surge in US yields that is weighing most heavily on risk-sensitive currencies like CAD.

It’s been a choppy, mixed start to the year in global financial markets, with equities higher in the US and Europe, oil prices swinging between gains and losses, whilst other commodities are hammered by a significantly stronger US dollar. The US dollar seems to be being driven by a safe haven bid that seems concentrated purely in FX markets (otherwise stocks would be lower), and this has also seen the yen supported (hence why they are the two best performing G10 currencies). Commodity and risk-sensitive currencies such as the Canadian, Australian and New Zealand dollar’s have all been getting hit hard and are each down 1.0-1.2% on the day versus the buck.

There isn’t one specific news event/fundamental catalyst behind Monday’s indecisive, mixed market tone. Notably, for FX markets, US bond yields are surging, with the 10-year up 10bps on the day to 1.60%. Unusually, this doesn’t seem to be having an effect on the outperforming yen (which is typically highly vulnerable to higher US yields), but it seems to be weighing on the rest of the G10. With Canadian, Australian and New Zealand bond markets shut on Monday for belated New Year’s Day holiday, CAD, AUD and NZD have all been robbed of the protection of a move higher in their own respective government bond yields that might have shielded the currencies from the dollar’s US yield rally-driven advances.

As to why US yields are surging, analysts at TD Securities said “it appears the sell-off today is being driven by the market viewing the Federal Reserve as still being likely to hike by mid-2022 despite the surge in COVID cases”. It's worth adding “that it's still early in the New Year and most of the world is off for the holiday, so thinner liquidity may certainly be exacerbating market moves” the analyst said.

In the last few hours, USD/CAD has surged back to the north of the 1.2750 level, having started 2022 underneath 1.2650. That amounts to an on-the-day gain of about 1.0%, which marks the pair’s best one-day performance since 26 November, the day the world first panicked about Omicron. The pair is likely to find some resistance in the 1.2800 area, given this area coincides with the 21-day moving average and has been an important balance area in the past. In the grand scheme of things, Monday’s move isn't significant, as it leaves USD/CAD trading close to the centre of December’s 1.2600-1.2950ish ranges.

USD/Cad

Overview
Today last price 1.2773
Today Daily Change 0.0127
Today Daily Change % 1.00
Today daily open 1.2646
 
Trends
Daily SMA20 1.2789
Daily SMA50 1.2653
Daily SMA100 1.2627
Daily SMA200 1.2498
 
Levels
Previous Daily High 1.275
Previous Daily Low 1.262
Previous Weekly High 1.2848
Previous Weekly Low 1.262
Previous Monthly High 1.2964
Previous Monthly Low 1.2608
Daily Fibonacci 38.2% 1.267
Daily Fibonacci 61.8% 1.2701
Daily Pivot Point S1 1.2594
Daily Pivot Point S2 1.2542
Daily Pivot Point S3 1.2464
Daily Pivot Point R1 1.2724
Daily Pivot Point R2 1.2802
Daily Pivot Point R3 1.2854

 

 

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD falls toward 0.9600 amid renewed dollar strength

EUR/USD falls toward 0.9600 amid renewed dollar strength

EUR/USD has turned south and declined toward 0.9600 in the second half of the day on Monday. A sharp decline witnessed in the GBP/USD pair and the souring market mood provided a boost to the dollar, lifting the US Dollar Index back above 114.00. 

EUR/USD News

GBP/USD falls below 1.0700 following BoE statement

GBP/USD falls below 1.0700 following BoE statement

GBP/USD came under renewed bearish pressure and slumped below 1.0700 during the American trading hours. In a statement published on Monday, the Bank of England said that they welcome the government's commitment to sustainable economic growth, triggering another GBP selloff.

GBP/USD News

Gold could soon challenge the $1,600 level

Gold could soon challenge the $1,600 level

Demand for the dollar continued at the beginning of the week, resulting in XAUUSD plummeting to $1,626.67, its lowest since April 2020. Concerns about potential recessions undermined the dismal market’s mood, pushing the greenback higher despite its extreme overbought conditions.

Gold News

Bitcoin: Investors need to prepare for volatile breakout

Bitcoin: Investors need to prepare for volatile breakout

Bitcoin price has been devoid of volatility for the last week and has been in a tight consolidation without directional bias whatsoever. This range bound move has formed a triangle pattern which could break either way. 

Read more

Three stocks that will be in the news this week: Amazon, Nike, Micron Technology

Three stocks that will be in the news this week: Amazon, Nike, Micron Technology

The S&P 500 index lost 4.1% last week and left traders melancholy with another week to go in this dreadful September. The S&P 500 index is down 6.6% so far in the month that is already known for poor performance, and most seem to think the pain will continue. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures